The demise of inflation targeting?

The RBA targets 2.5% pa inflation through the cycle. The Bank of England targets 2% over a two year horizon. The key to hitting these targets is credibility. The two charts below show the break-even inflation rates in 10 year government bonds in Australia and the UK between 2003 and 2011. The red line shows each central bank's inflation target. The Aussie expected inflation rate over the next 10 years is about 3%, almost exactly in line with what has happened over the last 10 years (and nowhere near 2.5%). The UK inflation expectation is even higher at 3.25%, way above the 2% target. Observe how both lines were trending up before the GFC, and how after some recent turbulence they are trending up again. Long story short, financial markets do not believe that either the RBA or the Bank of England will hit their inflation targets on average over the next decade. A worrying thought. My best guess is that central banking in 10 years time will look a little different to the central banking of today.