Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities (TIPS) are US government bonds designed to protect investors from inflation. Their principal value is adjusted periodically based on changes in the Consumer Price Index (CPI)—rising with inflation and falling with deflation. TIPS pay a fixed coupon rate applied to the adjusted principal, resulting in variable interest payments that track inflation. While TIPS are a US-specific instrument, they are relevant to Indian investors with international portfolios or those seeking to understand global fixed-income strategies for inflation protection.