Real interest rate
The nominal rate less inflation: how much purchasing power a deposit or a bond actually delivers.
Formula
i is the nominal rate and the Greek letter denotes inflation over the same period. Measured against realised inflation and against expectations, the real rate comes out different.
How to read the number
A negative real rate means money in a safe instrument loses purchasing power more slowly than money outside it — but loses it all the same.
When the metric lies
Also known as: real rate