Another factor is that indexed bonds, at least initially, might not be traded frequently in the secondary market. There could be an illiquidity premium built into the yield of the index-linked bond. Nevertheless, the fact remains that the introduction of inflation-linked bonds could improve the Reserve Bank’s information on inflation expectations.
The headwinds have abated but it is not clear they have yet switched to be tailwinds. One potential exception to this is the US. The fiscal stimulus that is in train this year and next is being delivered in an economy with limited spare capacity.