Real Interest Rates
Economic Indicators
Definition
Interest rates adjusted for inflation, representing the true cost of borrowing or return on lending in purchasing power terms, crucial for asset valuation and economic decision-making.
Key Points
- Nominal rate minus inflation rate
- Affects asset valuations significantly
- Negative real rates boost risk assets
Examples
5% bond yield - 3% inflation = 2% real rateNegative real rates favor stocks and goldQuick Info
Category
Economic Indicators
Related Topics
inflation adjusted
monetary policy
bond yields
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