In his speech, Gertjan Vlieghe looks at looks at influences on short versus long term interest rates. With current inflation risks we should expect yield curves to be flat, unlike the 1970s and 1980s. These fundamentals have been in place since the Bank of England independence, well before quantitative easing (QE) started, so we do not need to resort to QE to explain the current shape of yield curves. QE does affect the yield curve, but it does so primarily by affecting expectations of future monetary policy, revealing the central bank’s reaction function. This view of how QE works implies that unwinding QE need not have a material impact on the shape of the yield curve, or indeed on the economy, if properly communicated and done gradually.