Municipal Inflation-Linked Securities


DEFINITION of 'Municipal Inflation-Linked Securities'

Investment vehicles issued by various levels of governments containing variable coupon payments that increase and decrease with changes in the consumer price index (CPI).

BREAKING DOWN 'Municipal Inflation-Linked Securities'

This type of debt security is similar to regular municipal bonds, but municipal inflation-linked securities offer investors a slightly lower coupon rate because these securities are safer than debt instruments that expose the holder to inflation risk. Also, because these securities carry reduced inflation risk, they don't - like other debt securities - have the potential to increase in price should the rate of inflation subside.

  1. Coupon

    The annual interest rate paid on a bond, expressed as a percentage ...
  2. Principal Exchange Rate Linked ...

    A type of debt security that pays interest semiannually and has ...
  3. Consumer Price Index - CPI

    A measure that examines the weighted average of prices of a basket ...
  4. Inflation-Indexed Security

    A security that guarantees a return higher than the rate of inflation ...
  5. Inflationary Risk

    The uncertainty over the future real value (after inflation) ...
  6. Inflationary Psychology

    A state of mind that leads consumers to spend more quickly in ...
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