Inflation erodes the real value of money. Debtors owe a fixed amount of money, and when inflation rises, the real value of the money they repay is less than the real value of the money they borrowed. This benefits debtors as they are repaying with cheaper currency. Conversely, bondholders lend money at a fixed interest rate. If inflation rises unexpectedly, the fixed interest payments they receive buy fewer goods and services, reducing their real return. Therefore, inflation typically harms bondholders.