Longer-term deflation probabilities decline

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 2011. One measure of this deflation probability declined from 17 percent on November 9 to 14 percent on November 16, the lowest reading since mid-August. An alternative lower bound on the probability of deflation declined from 2 percent on November 9 to 0 percent on November 16.

Categories: deflation