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The Inflation Project


May 26, 2011

Longer-term deflation probabilities tick up but remain low

Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates can be used to measure probabilitiesof a net decline in the consumer price index over the five-year period starting in early 2011. One measure of this deflation probability was 12 percent on May 25. It has remained within a narrow 8–13 percent range since shortly after its history started with the issuance of the new 5-year TIPS in late April. An alternative lower bound on the probability of deflation was 0 percent after rounding.

Categories: deflation

 

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