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Inflation expectations and the risk of deflation

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  • Jens H. E. Christensen

Abstract

Predicting the course of inflation is one of the most important challenges facing monetary policymakers. Useful aids to such prediction are the measures of expected future inflation obtained from prices in government bond markets. An examination of recent inflation-indexed and non-indexed U.S. Treasury bond yields suggests that financial market participants believe that the probability of prolonged deflation has become fairly small.

Suggested Citation

  • Jens H. E. Christensen, 2009. "Inflation expectations and the risk of deflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov2.
    • Handle: RePEc:fip:fedfel:y:2009:i:nov2:n:2009-34
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    Citations

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    Cited by:

    1. Grishchenko, Olesya V. & Vanden, Joel M. & Zhang, Jianing, 2016. "The informational content of the embedded deflation option in TIPS," Journal of Banking & Finance, Elsevier, vol. 65(C), pages 1-26.
    2. Davis, J. Scott, 2015. "The asymmetric effects of deflation on consumption spending: Evidence from the great depression," Economics Letters, Elsevier, vol. 130(C), pages 105-108.
    3. Jens H. E. Christensen, 2010. "TIPS and the risk of deflation," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct25.

    More about this item

    Keywords

    Deflation (Finance); Inflation (Finance);

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