Inflation

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Visit the interest rate desk of any major investment bank in Europe and they are likely to be rather excited about the developments in the inflation-linked derivatives market.

But is this excitement a triumph of hope over reality? Inflation-linked markets have certainly come a long way over the past few years, but market participants would do well to be a little wary of the hype:

Hype 1: Europe’s inflation-linked market is set to receive a huge boost in terms of volume and diversity of underlying

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