Deflation Probabilities

Using estimates derived from Treasury Inflation-Protected Securities (TIPS) markets, described in a technical appendix, this weekly report provides two measures of the probability of consumer price index (CPI) deflation through 2020.

Deflation probabilities remain at 0 percent—July 23, 2015

The estimates of 2015–20 deflation probabilities—based on the 5-year TIPS issued in April and the 10-year TIPS issued in July 2010—have all been 0 percent for April 30 through July 22. The 2014–19 deflation probability is also 0 percent as of July 22.

Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2014 or the five-year period starting in early 2015.

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