Why are long-term interest rates not rising faster?

Given the persistently high level of inflation and the increasingly hawkish stance of central banks, one might expect long-term interest rates to rise sharply . Yet this is not the case, either in the United States or in the euro zone. Why is the rise in long-term interest rates so restrained? At first sight, there may be two explanations: Financial markets believe that central banks will raise their interest rates only temporarily and therefore that inflation will subside rapidly; Domestic and non-resident investors’ bond buying flows are being stimulated by the rise in interest rates, which is flattening yield curves, despite the announcement of the end of quantitative easing. We see that the first explanation applies in the United States and the euro zone; the second applies only in the United States. This suggests that expected interest rates may be revised upwards in future if inflation does not subside .