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.

2015–20 Deflation Probability Rises—May 5, 2016

The 2015–20 deflation probability was 6 percent on May 4, up from 3 percent on April 27. This deflation probability, measuring the likelihood of a net decline in the consumer price index over the five-year period starting in early 2015, is estimated from prices of the five-year Treasury Inflation-Protected Security (TIPS) issued in April 2015 and the 10-year TIPS issued in July 2010.

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