5-Year Breakeven Inflation Rate
T5YIE • Economic Data from Federal Reserve Economic Data (FRED)
Latest Value
2.40
Year-over-Year Change
-3.61%
Date Range
10/7/2021 - 8/6/2025
Summary
The 5-Year Breakeven Inflation Rate measures the market's expected average inflation rate over the next five years by comparing Treasury Inflation-Protected Securities (TIPS) with standard Treasury bonds. This metric provides crucial insights into future inflation expectations and market sentiment about long-term price stability.
Analysis & Context
This economic indicator provides valuable insights into current market conditions and economic trends. The data is updated regularly by the Federal Reserve and represents one of the most reliable sources for economic analysis.
Understanding this metric helps economists, policymakers, and investors make informed decisions about economic conditions and future trends. The interactive chart above allows you to explore historical patterns and identify key trends over time.
About This Dataset
The breakeven inflation rate represents the difference between nominal bond yields and inflation-adjusted bond yields, effectively capturing market participants' inflation expectations. Economists and investors closely monitor this indicator as a forward-looking gauge of anticipated price changes and monetary policy implications.
Methodology
The rate is calculated by subtracting the yield of a 5-year Treasury Inflation-Protected Security (TIPS) from the yield of a comparable nominal 5-year Treasury bond.
Historical Context
Central banks and policymakers use this metric to assess market expectations and potentially adjust monetary policy strategies.
Key Facts
- Represents market-implied inflation expectations over a 5-year period
- Derived from the difference between nominal and inflation-protected bond yields
- Serves as a forward-looking indicator of potential price changes
FAQs
Q: What does a high breakeven inflation rate indicate?
A: A high breakeven rate suggests market expectations of higher future inflation, potentially signaling economic expansion or inflationary pressures.
Q: How often is the 5-Year Breakeven Inflation Rate updated?
A: The rate is updated continuously during market trading hours, with real-time changes reflecting current bond market conditions.
Q: How do investors use the breakeven inflation rate?
A: Investors use this metric to make informed decisions about investment strategies, asset allocation, and hedging against potential inflation.
Q: Can the breakeven rate predict actual future inflation?
A: While informative, the breakeven rate is a market expectation and not a guaranteed prediction of actual future inflation rates.
Q: What limitations exist in interpreting this metric?
A: The rate can be influenced by market liquidity, risk premiums, and temporary market distortions, requiring nuanced interpretation.
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Citation
U.S. Federal Reserve, 5-Year Breakeven Inflation Rate [T5YIE], retrieved from FRED.
Last Checked: 8/1/2025