Work out break even inflation rate instantly with clear inputs, formula shown and shareable results.
Break-even inflation is the rate at which a nominal bond and an inflation-linked bond of the same maturity deliver the same return. It is the market's implied inflation expectation plus an inflation risk premium.
Break-even inflation
Break-even = (1 + nominal yield)/(1 + real yield) - 1
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
It is a market-implied expectation, but it also contains liquidity and risk premia, so it is a biased forecast.
Whenever realised inflation exceeds the break-even rate over the holding period.