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Financial market outlook for inflation

Author

Listed:
  • Michael D. Bauer
  • Jens H. E. Christensen

Abstract

Prices of special financial instruments called inflation derivatives can provide valuable insight into investors? views of future inflation. Projections from inflation swap rates suggest inflation will remain low for some time and return only slowly to levels consistent with the Federal Reserve?s notion of price stability. Inflation caps and floors give evidence that investors seem less uncertain about inflation forecasts than in recent years, and that they perceive a favorable inflation outcome as increasingly likely.

Suggested Citation

  • Michael D. Bauer & Jens H. E. Christensen, 2014. "Financial market outlook for inflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfel:00016
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    File URL: http://www.frbsf.org/economic-research/publications/economic-letter/2014/may/financial-market-outlook-inflation-derivatives/el2014-14.pdf
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    References listed on IDEAS

    as
    1. Vratislav Izák, 2014. "Private and Public Debt," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2014(1), pages 4-21.
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    Citations

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    Cited by:

    1. Filippo Natoli & Laura Sigalotti, 2018. "Tail Co-movement in Inflation Expectations as an Indicator of Anchoring," International Journal of Central Banking, International Journal of Central Banking, vol. 14(1), pages 35-71, January.
    2. Michael D. Bauer & Erin McCarthy, 2015. "Can we rely on market-based inflation forecasts?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    3. Stefano Neri & Guido Bulligan & Sara Cecchetti & Francesco Corsello & Andrea Papetti & Marianna Riggi & Concetta Rondinelli & Alex Tagliabracci, 2022. "On the anchoring of inflation expectations in the euro area," Questioni di Economia e Finanza (Occasional Papers) 712, Bank of Italy, Economic Research and International Relations Area.
    4. Sara Cecchetti & Davide Fantino & Alessandro Notarpietro & Marianna Riggi & Alex Tagliabracci & Andrea Tiseno & Roberta Zizza, 2021. "Inflation expectations in the euro area: indicators, analyses and models used at Banca d’Italia," Questioni di Economia e Finanza (Occasional Papers) 612, Bank of Italy, Economic Research and International Relations Area.
    5. Yifan Cao & Adam Hale Shapiro, 2014. "Will inflation remain low?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.

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