Real interest rates are affected by inflation expectations

Analysis - October 2020 - No. 19

Authors Adolfsen, Jakob; Bess, Mikkel; Pedersen, Jesper
Subject Monetary-policy transmission; Monetary policy; Danmarks Nationalbank's objectives and tasks
Type Analysis
Year 2020
Published 21 October 2020
The real interest rate is important for the economic development and is affected by the nominal interest rate and inflation expectations. This analysis illuminates what the real interest rate is, why it is important for real economy development, and the challenges that may be involved in measuring its size and impact on the economy.