Inflation-Linked Certificates of Deposit
Categories: Bonds
See: Certificate of Deposit. See: Index-Linked CD.
Most CDs are "vanilla." They sell at some discount to par, like $987.32, and then pay the investor $1,000 some 6-ish months later. But in times of high inflation, having CDs linked to it...can matter.
Some CDs have been offered with a kind of tweak as to the eventual payout, so that the "target" principal at the end is, say, $1,000. But if inflation exceeds an expected, say, 4.234% during the owned period for that CD issue, then the payout is adjusted upward so that the investor is exposed to the inflation numbers.
That's the good news. If inflation is actually less than projected, investors get a gentle haircut and receive less than the $1,000 notional par value that they thought they were signing up for.
Yeah, too bad for you.