Treasury Inflation-Protection Security Law and Legal Definition

Treasury Inflation-Protection Security (TIPS) is a note issued by the U.S. Treasury to reduce the uncertainty associated with future inflation that faces investors. In TIPS, the principal amount of the security is adjusted for inflation according to the consumer price index but the inflation adjusted principal is not paid until maturity. It is like regular Treasury bonds except that the principal value of the bond upon redemption is indexed for inflation as measured by changes in the Consumer Price Index.