Real interest rates describe the growth in the real value of the interest on a loan or deposit, adjusted for inflation. Nominal interest rates on the other hand show us the raw interest rate, which is unadjusted for inflation. If the inflation rate in a certain country were zero percent, the real and nominal interest rates would be the same number. As inflation reduces the real value of a loan, however, a positive inflation rate will mean that the nominal interest rate is more likely to be greater than the real interest rate. We can see this in the recent inflationary episode which has taken place in the wake of the Coronavirus pandemic, with nominal interest rates rising over the course of 2022, but still lagging far behind the rate of inflation, meaning these rate rises register as smaller increases in the real interest rate.
Monthly 10-year real interest rate, Federal Funds effective rate and inflation rate in the United States from 1982 to 2024
Date of release refers to the most recent date of access.
The inflation rate refers to the "Sticky Price Consumer Price Index less Food and Energy", a measure of inflation commonly used in the United States which does not include categories which are subject to volatile price movements such as food and energy (thus sometimes referred to as 'core inflation').
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Archival FRED. (October 1, 2024). Monthly 10-year real interest rate, Federal Funds effective rate and inflation rate in the United States from 1982 to 2024 [Graph]. In Statista. Retrieved December 22, 2024, from https://www.statista.com/statistics/1342636/real-nominal-interest-rate-us-inflation/
Archival FRED. "Monthly 10-year real interest rate, Federal Funds effective rate and inflation rate in the United States from 1982 to 2024." Chart. October 1, 2024. Statista. Accessed December 22, 2024. https://www.statista.com/statistics/1342636/real-nominal-interest-rate-us-inflation/
Archival FRED. (2024). Monthly 10-year real interest rate, Federal Funds effective rate and inflation rate in the United States from 1982 to 2024. Statista. Statista Inc.. Accessed: December 22, 2024. https://www.statista.com/statistics/1342636/real-nominal-interest-rate-us-inflation/
Archival FRED. "Monthly 10-year Real Interest Rate, Federal Funds Effective Rate and Inflation Rate in The United States from 1982 to 2024." Statista, Statista Inc., 1 Oct 2024, https://www.statista.com/statistics/1342636/real-nominal-interest-rate-us-inflation/
Archival FRED, Monthly 10-year real interest rate, Federal Funds effective rate and inflation rate in the United States from 1982 to 2024 Statista, https://www.statista.com/statistics/1342636/real-nominal-interest-rate-us-inflation/ (last visited December 22, 2024)
Monthly 10-year real interest rate, Federal Funds effective rate and inflation rate in the United States from 1982 to 2024 [Graph], Archival FRED, October 1, 2024. [Online]. Available: https://www.statista.com/statistics/1342636/real-nominal-interest-rate-us-inflation/