If inflation expectations are projected to remain significantly above the central bank's target for several years, what is the most likely impact on the nominal yield of long-term Treasury bonds?
A.
Nominal yields will remain stable because long-term rates are primarily determined by current overnight rates.
B.
Nominal yields will decrease because high inflation typically precedes a period of aggressive monetary easing.
C.
Nominal yields will increase to compensate for the anticipated loss in purchasing power.
D.
Nominal yields will decrease as investors move capital into the safety of government securities.
A.
Nominal yields will remain stable because long-term rates are primarily determined by current overnight rates.
B.
Nominal yields will decrease because high inflation typically precedes a period of aggressive monetary easing.
C.
Nominal yields will increase to compensate for the anticipated loss in purchasing power.
D.
Nominal yields will decrease as investors move capital into the safety of government securities.