Indexed Treasury Obligations Act of 1985

Indexed Treasury Obligations Act of 1985 - Requires the Secretary of the Treasury to issue between ten and 50 percent of the face amounts of Government obligations that mature in not less than five and not more than 20 years in the form of indexed obligations. Defines an "indexed obligation" as an obligation which is redeemable only at maturity for an indexed face amount of at least $1,000 on which interest payable at periodic intervals of one year or less is computed on the basis of the face amount increased by a certain inflation ratio.

Requires a representative distribution of indexed obligations as determined by the Secretary to be practicable, appropriate, and consistent with prudent debt management. Directs the Secretary to prescribe terms and conditions for the sale of such obligations.