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Discover Latest #Real interest News, Articles and Videos with Contenting
Real interest rate is the rate of interest an investor, saver or lender receives (or expects to receive) after allowing for inflation. It can be described more formally by the Fisher equation, which states that the real interest rate is approximately the nominal interest rate minus the inflation rate. Real interest rates are important because they measure the real return on investments. They are used to compare the effectiveness of investments in different countries, since the nominal interest rate does not take into account the effect of inflation. 1. "Real Interest Rates: A Primer" This article provides an overview of real interest rates, including how to calculate them, their importance, and their impact on investments. It also discusses the different types of real interest rates and their uses. 2. "What is the Real Interest Rate?" This article explains what the real interest rate is and why it matters. It also provides an overview of how real interest rates are calculated and used. 3. "Real Interest Rates: What Investors Need to Know" This article provides an overview of real interest rates and their importance for investors. It discusses how to calculate real interest rates, their impact on investments, and their uses.
RBI wants to keep inflation vigil, MPC’s external members see room to ease a bit - The Economic Times
External members of the Monetary Policy Committee suggest reducing policy interest rates due to temporary food shocks and high real interest rates. However, caution is advised as markets are running ahead of policy makers and inflation history suggests challenges in bringing it down.
Real interest rates above 2% may not be sustainable from growth perspective: Shashanka Bhide - The Economic Times
With the policy rate as the instrument, there is a trade-off in terms of growth while bringing down the inflation rate to the target. However, a moderate inflation rate is also needed to achieve sustained high growth. While real interest rates above 2% may not be sustainable from a growth perspective, the persistence of inflation above the target is also unacceptable in the present framework, says Shashanka Bhide, member of the Monetary Policy Committee of the Reserve Bank of India.
How the AI revolution and backward-looking central banks could trigger aggregate demand and interest rate overshooting: some model simulations | The Market Monetarist
I have been thinking about the impact on the economy of an increase in productivity y*, for example, due to the AI revolution, and I assume that it takes time for the central bank to realize that the increase in y* has also increased the natural real interest rate r*. I have tried to model…
Cowen's Third Law, illustrated - Marginal REVOLUTION
We further show that demographic and productivity factors do not represent convincing drivers of real interest rates over long spans. That is from a new AER piece by Kenneth S. Rogoff, Barbara Rossi, and Paul Schmelzing. Here are less gated copies of the piece. Here are some MR posts on Cowen’s Third Law.
Finally, exchange rate models seem to work pretty well - Marginal REVOLUTION
Exchange-rate models fit very well for the U.S. dollar in the 21st century. A “standard” model that includes real interest rates and a measure of expected inflation for the U.S. and the foreign country, the U.S. comprehensive trade balance, and measures of global risk and liquidity demand is well-supported in the data for the U.S. […]
Will transformative AI raise interest rates? - Marginal REVOLUTION
We want to know if AGI is coming. Chow, Halperin, and Mazlish have a paper called “Transformative AI, Existential Risk, and Real Interest Rates” arguing that, if we believe the markets, it is not coming for some time. The reasoning is simple. If we expect to consume much more in the future, and people engage […]
Some Links - Cafe Hayek
TweetRobert Pozen explains that Trump’s tariffs will repel foreign portfolio investment in the United States and thus – among other harms – raise real interest rates. Two slices: The Trump administration says this week it will impose reciprocal tariffs on countries that have regularly run substantial trade surpluses with the U.S. But these surpluses have […]