Inflation-indexed securities

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Inflation-indexed securities

Securities such as bonds or notes that guarantee a return higher than the rate of inflation if the security is held to maturity.

Inflation-Indexed Securities

A bond or other fixed-rate security with an interest rate that varies according to inflation. An inflation-indexed bond, for example, may pay a fixed coupon plus an additional coupon with the amount adjusted every so often according to some inflation indicator, such as the Consumer Price Index. If these securities are held to maturity, then the investor guarantees that the return will exceed the rate of inflation. Inflation-indexed securities exist to provide a low-risk investment vehicle in which the return is guaranteed not to fall below the rate of inflation. See also: I Bond.
References in periodicals archive ?
Or the risk of investing in long-term inflation indexed bonds from the perspective of a short-horizon investor?
The RBI said that in consultation with Government of India, it has decided to launch Inflation Indexed Bonds (IIBs).
These could be in the form of inflation indexed bonds or inflation indexed national security certificates.
One sign that it's benign is the fact that the Treasury introduced inflation indexed bonds, called TIPS--Treasury Inflation Protection Securities--which in the current environment are generating a lot of interest.
Thus, the interest rate will remain fixed, but the amount of each interest payment will vary with the CPI-U Notice 96-51(34) explains the content of planned proposed and temporary regulations that will apply to all inflation indexed bonds.
For instance, in the financial sector, the announcement of inflation indexed bonds would serve as a hedge against inflation and would wean individuals away from purchase of gold.
He also introduces a new way to calibrate forward looking central bank policy rules using financial market data on real interest rates on inflation indexed bonds and breakeven inflation rates instead of the instrumental variable, GMM approach introduced in his earlier work.