UST - What Is The 'Real' Interest Rate?

• The real interest rate is the nominal interest rate adjusted for the expected change in the associated currency’s purchasing power, where “expected” is the operative word.
• Of course, when you buy the security, you have no way of knowing what will happen to the currency’s purchasing power in the future, but your decision to buy will be based on the nominal yield offered by the security and what you EXPECT to happen to the currency.
• If the main concern is the effects of interest rates and “inflation” on the prices of assets, commodities, and gold, then the numbers that matter are today’s nominal interest rates and inflation expectations.

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