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Inflation concerns are rising again, potentially slowing the pace of monetary easing.gettyInflation concerns are on the rise again. The Federal Reserve’s latest Summary of Economic Projections showed central bank officials see inflation potentially ending in 2025 at 2.5%, above their previous forecast of 2.1% and higher than their 2% target. There is a growing possibility of a resurgence in consumer prices and investors should consider adding inflation protection to their portfolios.
The employment market is strong, economic growth is exceeding expectations, and potential inflation-inducing changes in fiscal and immigration policy loom large. The bond market has already accepted that the Fed may not further ease monetary policy. Ten-year Treasury yields have jumped 0.90% in the last three months due to the better economic outlook.
There are several ways to bet on the resurgence of inflation using ETFs. How the Fed responds to the threat of rising CPI, whether bond investors view inflation as temporary or long-lived, and whether inflation is a global or US-centric phenomenon will determine the performance of the various options.
Here are a few potential strategies to consider.
Vanguard Short-Term Inflation-Protected Securities ETF (VTIP)
VTIP focuses on short-term Treasury Inflation-Protected Securities (TIPS) with maturities of less than five years, providing exposure to inflation-linked bonds with reduced interest rate risk. With a manage …
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