Which group is hurt by inflation being less than expected?
A) holders of TIPS
B) lenders of fixed-rate mortgages
C) borrowers with fixed-rate mortgages
D) all of the above

Question

Quizplus · Accepted Answer

Borrowers with fixed-rate mortgages benefit when inflation is less than expected because the real value of their debt decreases. On the other hand, holders of TIPS and lenders of fixed-rate mortgages would prefer higher-than-expected inflation because it erodes the value of their investments and damages their returns.

Which Group Is Hurt by Inflation Being Less Than Expected