The role of technical factors in euro area inflation-linked swap rates

When long-term inflation-linked swap (ILS) rates for the euro area peaked in summer 2023, some observers expressed concerns that ILS rates reflected not only inflation compensation, but also non-fundamental “technical” factors.

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Provider: 
ECBECB
URL: 
https://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202403_07~668fc73c60.en.htmlhttps://www.ecb.europa.eu//press/economic-bulletin/focus/2024/html/ecb.ebbox202403_07~668fc73c60.en.html
Retrieved on: 
Thursday, April 25, 2024
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Tags: 
Uncertainty, Euro, ECB, Risk, COVID-19, Principal component analysis, Bank, Journal, Ankh-Morpork, Hepatology, OIS, The Journal of Finance, Deutsche Bundesbank, Nominal, ILB, Elasticity, T3, Bank of England, Cryptocurrency
Geotags: 
CAMPBELL, UKRAINE, UK
Summary
Key Points: 
  • When long-term inflation-linked swap (ILS) rates for the euro area peaked in summer 2023, some observers expressed concerns that ILS rates reflected not only inflation compensation, but also non-fundamental “technical” factors.
  • Such factors potentially reduced the usefulness of ILS rates in terms of gauging inflation expectations and risks.
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