[derobert]

The Fed now pays interest on reserves (new as of last fall). When the Fed wants to pull that money out, it can (1) raise the interest rate on reserves, thus encouraging banks to hold the reserves and (2) sell the assets it bought to raise the monetary base.

Looking at, for example, the current yield on treasuries shows very little inflation expectations.

[bitdiddle]

the gap between treasuries and TIPS is growing nicely, signally at least inflationary expectations