Don’t be afraid of inflation… We’re not

February 15, 2011 Categories: Economic Insights
Print this article
U.S. Breakeven Inflation Rate

Source: Bloomberg, Russell Investments. As of 1/17/11. Breakeven inflation rates are derived by taking the difference between the respective yield on the U.S. inflation protected security versus its comparable nominal U.S. fixed income security.

Inflation seems to be a topic that everyone is talking about. At Russell, we’ve been doing a lot of talking – and a lot of thinking – about it as well.

We do not see a high probability of the late-1970s style of inflation, nor do we feel that deflation is very likely. The Federal Reserve is working hard to avoid deflation and we expect to see inflation move up to the Federal Reserve’s stated 2% ceiling over the course of the next few years. As you can see from the breakeven rates in the graph above, the market expects us to reach 2% inflation in about 6 years. (If you’re interested in learning more about breakeven inflation rates, please take a look at Frank Pape’s post from Decemeber).

Editors’ note, December 2013: a previous version of this blog post offered a link to additional research papers that have since expired.

RFS 11816-a

  1. No comments yet.

Russell Investments is a trade name and registered trademark of Frank Russell Company, a Washington USA corporation, which operates through subsidiaries worldwide and is part of London Stock Exchange Group.

The Russell logo is a trademark and service mark of Russell Investments.

Copyright © Russell Investments 2015. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an “as is” basis without warranty.

Russell Financial Services, Inc., member FINRA (, part of Russell Investments.

Investors can be emotional. Help them stay focused.

Market Cycles of EmotionsSubscribe to the Helping Advisors Blog and receive a free copy of the Market Cycle of Emotions.

We will only use your email for Helping Advisors Blog updates.