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RBA Glossary definition for Real interest rate

Real interest rate – The real interest rate refers to the cost of borrowing money (i.e. the nominal interest rate) net of inflation. It takes account of the fact that part of the nominal interest that borrowers pay to lenders represents compensation for anticipated inflation. The remaining �real� component better reflects the economic cost of borrowing and the return to lending.

RBA Glossary definition for interest rate

interest rate – The term used to describe the cost of borrowing money or the return to the owner of the funds which are invested or lent out. It is usually expressed as a percent per annum of the amount of money borrowed, lent or invested.

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Appendix: Data Sources and Methods

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
Bulletin. ; historical series are available on the Bulletin Database. The monthly data are averaged for each quarter, to form a better representation of the average interest rate prevailing in the quarter. ... Data for real interest rates are calculated
https://www.rba.gov.au/publications/rdp/1988/8805/appendix.html

Financial Indicators and Real Private Demand: Graphical Comparisons

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
There was a marked downward trend in real interest rates in the first half of the 1970s, and real rates were only just positive at the end of the 1970s (see ... FIGURE 4: INTEREST RATES AND REAL PRIVATE DEMAND. (DEMAND SMOOTHED). Despite this, there is a
https://www.rba.gov.au/publications/rdp/1988/8805/financial-indicators-and-real-private-demand-graphical-comparisons.html

The Relationship between Financial Indicators and Economic Activity: 1968-1987

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1988/8805.html

The Indicators

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
The other issue of importance is whether to use a nominal or a real interest rate. ... One simple measure of the real rate of interest is brought into consideration where relevant.
https://www.rba.gov.au/publications/rdp/1988/8805/indicators.html

Conclusions

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
The most useful financial indicators, in the sense of having a consistent, leading relationship to real private demand, are short-term interest rates and M1 (though these do not seem to ... The process of deregulation does not appear to have weakened the
https://www.rba.gov.au/publications/rdp/1988/8805/conclusions.html

Introduction

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
The financial indicators include interest rates and a range of financial aggregates; the measures of activity are confined to changes in real and nominal private final expenditure. ... the movements in financial variables (interest rates and financial
https://www.rba.gov.au/publications/rdp/1988/8805/introduction.html

Financial Indicators and Real Private Demand: Correlation Analysis

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
The top panel shows results for the relationship between interest rates and real private demand. ... The correlations between real private demand and interest rates at leads from one to four quarters are the strongest identified in the various tests in
https://www.rba.gov.au/publications/rdp/1988/8805/financial-indicators-and-real-private-demand-correlation-analysis.html

Financial Indicators and Nominal Private Demand: Graphical Comparisons

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
During this period, movements in real interest rates were sometimes quite different to those in nominal rates. ... Of course, it is difficult to be definitive about what borrowers and lenders perceived real interest rates to be at the time.
https://www.rba.gov.au/publications/rdp/1988/8805/financial-indicators-and-nominal-private-demand-graphical-comparisons.html

Financial Indicators and Nominal Private Demand: Correlation Analysis

1 Aug 1988 RDP 8805
Michele Bullock, Dirk Morris and Glenn Stevens
For interest rates, all significant coefficients are negative, as expected. In other words, a rise in the short-term interest rate is generally associated with a fall in nominal demand, a ... They also show larger coefficients on M3 as compared with
https://www.rba.gov.au/publications/rdp/1988/8805/financial-indicators-and-nominal-private-demand-correlation-analysis.html