inflationsrisk
Inflationsrisk refers to the risk that rising or unpredictable inflation erodes the purchasing power of money and the real value of financial returns. It is a key consideration for savers, borrowers, and investors because it can affect the real value of cash, debt obligations, and asset prices.
Causes and characteristics: Inflation can be persistent, volatile, or unexpected. Inflation risk is particularly acute for
Measurement: Analysts use inflation indicators like consumer price indices and inflation expectations. The breakeven inflation rate,
Implications: For households, inflation erodes purchasing power. For lenders and borrowers, it redistributes real wealth. For
Management: Common hedges include inflation-indexed securities, real assets, and diversified strategies. Shorter duration and global diversification
Limitations: Inflation is inherently uncertain and can surprise policymakers. Measurement gaps and cross-country differences complicate assessment.