Ankh-Morpork

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

Retrieved on: 
Thursday, April 25, 2024
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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.

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.