Inflation is currently front of mind for every policymaker in the UK, where prices have been rising at a higher level than elsewhere in Europe. As ministers and their advisers debate the best way to respond to the crisis, investors in the country’s inflation swaps market are grappling with their own dilemma: how to cut the costs of their inflation hedges.

One of the key discussions concerns repacks. These complex structures, introduced around 10 years ago, enable banks to turn expensive long