Inflation risk

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Inflation risk

Also called purchasing power risk, the risk that changes in the real return the investor will realize after adjusting for inflation will be negative.

Inflation Risk

The risk that the rate of inflation will exceeds the rate of return on an investment. For example, if the rate of inflation is 5% over a year and the rate of return is 3%, then the investor has effectively taken a loss even though he/she has made a profit in absolute terms. Inflation risk applies especially to fixed-return securities as there is no possibility that the rate of return will increase to surpass inflation. For this reason, some fixed-return securities are inflation-indexed, which means that their nominal returns change, while their real returns stay the same. See also: Treasury Inflation Protected Securities.
References in periodicals archive ?
"After responding decisively to increased inflationary risks in late 2018, the Central Bank of Russia has reversed this monetary tightening through 25bp cuts in June and July, bringing its key rate to 7.25%."
According to the CBA estimates, stabilizing factors affecting inflationary risks in Azerbaijan remain, and this is indicated by surveys, he said.
Inflationary risks. Compared to March, the short-term inflation risks have decreased.
As such, the further easing we forecast is unlikely to pose significant inflationary risks,' Fitch Solutions said.
"BSP officials have sounded a more neutral tone given near-term inflationary risks.
On the other hand, inflationary risks just don't seem to be present.
The decision to keep the rates steady was taken unanimously, and the monetary policy committee said that it has seen a reduction of inflationary risks since its last meeting in December.
Despite slowdown of annual inflation rate, this trend can change as a result of inflationary risks. Tightening of monetary policy can reduce these risks and inflationary expectations.
Inflationary risks along with broadly negative global cues depressed the Indian rupee to a new low of 72.74 on Tuesday.
"Select stocks with good trading angles to optimize on return given inflationary risks," said online brokerage firm 2TradeAsia.com adding a warning of the approach of the ghost month (August 11 to September 12) when Asian investors steer clear of the market.
The IMF's remark comes days after Egypt's central bank decided to keep interest rates steady, citing inflationary risks, and after the IMF executive board announced Egypt had made sufficient progress on economic reforms to receive its next loan disbursal.
The NBG has kept its policy rate at 7.25% since the start of the year as it believes that the factors affecting inflationary risks have not yet sufficiently weakened.