The recent dynamic in the Treasury Inflation-Protected
Securities (TIPS) market has raised many important
questions for investors and policymakers. Breakeven
inflation (BEI) rates have declined consistently over the
last few months, as seen in Figure 1. The zero-coupon
breakeven inflation rate for a maturity of 10 years traded
roughly in the range of 200 to 250 basis points (bps) from
2010 to 2013 but has declined from about 230 bps in
mid-2014 to less than 150 bps at the end of January 2016.
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