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Inflationary Risk

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Inflationary Risk
The uncertainty over the future real value (after inflation) of your investment.

Notes:
This is the risk that inflation will undermine the performance of your investment.

Looking at results without taking into account inflation is the nominal return. The value you should care about is the growth of your purchasing power, referred to as the real return.


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But Fed Chairman Ben Bernanke continues to indicate inflationary risks remain, leaving the door open for the Fed to raise interest rates if inflation doesn't gradually moderate as expected.
Since the G-7 financial ministers decided to put some real teeth into their fight to reduce the inflationary risk in April, all world banks have been raising interest rates.
And judging by their public and private comments, they do see an inflationary risk.
 
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