Scott Sumner is trying to figure out the answer to that question in an interesting thread on his blog. I just posted this comment.
Scott, Sorry I have not been following this thread and am just jumping in from out of left field, so pardon me if this has already been mentioned, but as you pointed out to me in an email, one also needs to take into account the uncertainty or riskiness of estimates of expected inflation. I think that it is quite plausible that the FOMC statement confused everybody and increased the perceived risk of TIPS, causing the BE TIPS spread to rise even though the mean expected inflation rate may not have risen or even fallen. It’s a jungle out there.
To elaborate slightly: Last week when things started to fall apart, I flagged falling inflation expectations as a likely factor tending to push down stock prices. For several days changes in stock prices and in inflation expectations (as reflected in the TIPS spread) were fairly closely correlated. This week, however, the S&P 500 seemed to be decoupled from the TIPS spread. I asked Scott in an email what his thoughts were about that, and he reminded me that the Cleveland Fed has a model in which the TIPS spread is decomposed into inflation expectations plus a risk factor. (Sorry, I am rushed now so I can’t provide a link.) My tentative hypothesis is that the FOMC confused everybody this week causing up and down movements in the stock market and an increase in the TIPS spread which reflected not an increase in expected inflation but increased risk in attempting to predict expected inflation. Once again, a great job by the FOMC.