The bond also gives investors a chance to express their opinion on the expected rate of inflation in Japan over the next ten years, says John Richards of Barclays Capital in Tokyo.
We are now willing to buy safe bonds that pay above our expected rate of inflation (after tax) out to 7-10 year maturities rather than the 3-5 year target we have maintained for the past two years.
If five-year Treasury bonds are yielding 1.25%, as they were on November 2nd, then a negative 0.55% real yield on inflation-linked bonds implies an expected inflation rate of 1.8%.
ECONOMIST: A very unusual sign of confidence in economic policy
Projections will include the expected pace of economic growth, the anticipated unemployment rate and any notions of inflation.
Such a rate, they suggested, could lie anywhere between 4.5% and 6.5% ie, the sum of expected inflation of about 2.5% and a real interest rate of between 2% and 4%.
Rising commodity prices feed into rising real estate prices, as investors rush to buy real assets that are expected to keep up or even exceed the rate of inflation.
Bonds pay interest based on the expected inflation rate until maturity, plus a fair risk premium over inflation based on the riskiness of the bond.
The BOE said the annual rate of inflation will remain above its target for longer than expected, but it won't tighten monetary policy and risk derailing a recovery.
The Cleveland Fed inflation estimates, based on financial market data including the interest rate spread between ordinary and inflation-protected Treasury bonds, show expected inflation of 1.4 percent per year over the next ten years.
The power-sharing deal is expected to keep Zimbabwe's melting economy from a total collapse: Its official inflation rate of 231 million percent is the world's worst, and the United Nations estimates that 5 million people need urgent food aid.
On the other hand, an acceleration in the inflation rate to just 3.0% would be expected to boost the level of the index by 8.92% annually through 2019.
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