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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 2: Regression Equations

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
RDP 9104: Cross-Country Relationship Between Interest Rates and Inflation over Three Decades Appendix 2: Regression Equations. ... 4.75. (0.57). 0.14. (0.11). 0.09. b New Zealand data on inflation (and hence the real interest rate) is adjusted for the
https://www.rba.gov.au/publications/rdp/1991/9104/appendix-2.html

The Cross-country Relationship between Interest Rates and Inflation over Three Decades

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
Research Discussion Papers contain the results of economic research within the Reserve Bank
https://www.rba.gov.au/publications/rdp/1991/9104.html

Some Hypotheses

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
Since saving and investment decisions in the domestic economy are made on the basis of real after-tax interest rates, a fall in the real after-tax interest rate will encourage ... If the authorities want the real after-tax interest rate to remain
https://www.rba.gov.au/publications/rdp/1991/9104/some-hypotheses.html

A Simple Test

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
Denmark all ran real pre-tax interest rates above the world real interest rate and had close to no progress on inflation. ... New Zealand and the UK have experienced a rise in inflation, despite running pre-tax real interest rates above the world rate.
https://www.rba.gov.au/publications/rdp/1991/9104/simple-test.html

Conclusion

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
years, such countries have also tended to have higher short-term real interest rates. ... The graphical analysis also established that the relationship between real interest rates and inflation across countries has changed since the 1970s.
https://www.rba.gov.au/publications/rdp/1991/9104/conclusion.html

Introduction

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
This implies that, over the period they are running tighter monetary policies, they will have higher real interest rates. ... Hence, the higher interest rates are due to a higher real component in the interest rate.
https://www.rba.gov.au/publications/rdp/1991/9104/introduction.html

Nominal Interest Rates and Inflation: 1961–1989

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
GRAPH 13: REAL SHORT-TERM INTEREST RATE AND INFLATION, 1984–89. To summarise the important observations on short-term interest rates:. ... Since the level of real interest rates will also impact on the rate of inflation, π is strictly endogenous.
https://www.rba.gov.au/publications/rdp/1991/9104/nominal-interest-rates-and-inflation-1961-1989.html

References

1 Jun 1991 RDP 9104
Michele Bullock and Mark Rider
RDP 9104: Cross-Country Relationship Between Interest Rates and Inflation over Three Decades References. ... R. (1991), “The Effect of Steady Inflation on Interest Rates and the Real Exchange Rate in a World with Free Capital Flows”, Reserve Bank of
https://www.rba.gov.au/publications/rdp/1991/9104/references.html