Interest rates play a crucial role in the economy because they affect consumers, businesses, and investors alike.<\/p>\n\n\n\n
They can have significant implications for people\u2019s ability to access credit<\/a>, manage debts, and buy more expensive goods such as cars and houses.<\/p>\n\n\n\n This graphic uses data from Infinity Asset Management<\/a> to visualize the real interest rates (ex ante) of 40 major world economies, by subtracting projected inflation over the next 12 months from current nominal rates.<\/p>\n\n\n\n Ex ante <\/strong>is Latin for \u201cbefore the event\u201d, and in this case refers to the fact that this data uses projected inflation rates<\/em> to calculate real interest rates.<\/p>\n\n\n\n Nominal interest rates refer to the rate at which money can be borrowed or lent at face value, without considering any other factors like inflation<\/a>.<\/p>\n\n\n\n Meanwhile, the real interest rate<\/strong> is the nominal interest rate after taking into account inflation, reflecting the true cost of borrowing or lending. Real interest rates can fluctuate over time and are influenced by various factors such as inflation, central bank policies, and economic growth. They can also influence economic growth by affecting investment and consumption decisions.<\/p>\n\n\n\nNominal Interest Rates vs. Real Interest Rates<\/h2>\n\n\n\n