Australia inflation swap market moribund despite price rise expectations

Inflation swaps market has become illiquid with most activity on physical inflation-linked bonds


If inflation really is, as Ronald Reagan said, "as violent as a mugger", then Australia is standing on the cusp of an increase in crime. Inflation figures for the first quarter of 2014 show consumer price index (CPI) inflation rising to 2.9% year-on-year from 2.7% in the previous quarter. According to Crédit Agricole, inflation will remain elevated through the rest of the year, which could see it exceed the Reserve Bank of Australia's target of 3% for the first time since 2011. This ma