Translation of "Realverzinsung" in English

It is also the underlying determinant of the real rate of interest.

By contrast, the annual real interest rate on the five-year United States Treasury Inflation-Protected Security (TIPS) is -1.02%.

The fall in the value of money thus increases the amount of interest income lost to tax , and from here it is only a relatively small step to expropriation through negative real interest rates after tax .

Moreover, if deflation were to become entrenched in the eurozone and other parts of the world, a negative nominal return could be associated with a positive real return.

That is why the risk premium on Italian and other Southern European debt had risen at one time to 5%, and why, at the same time, the German government can issue short-term debt at negative real interest rates.

Subtract 2.5% for inflation, and you get a benchmark expected real return of 1.26%.

Thus, the expected fundamental real return on diversified US stock portfolios right now is in the range of 6% to 7%.

Even the annual real interest rate on the 30-year TIPS is only 0.63% – and you run a large risk that its value will decline at some point over the next generation, implying a big loss if you need to sell it before maturity.

Because the inflation rate is also about 2%, this implies a negative real interest rate, which is confirmed by the interest rate of -0.6% on ten-year Treasury Inflation Protected Securities (TIPS), which adjust interest and principal payments for inflation.

Last but not least, governments that can borrow at unprecedentedly low rates – 0% in real terms over 10 years in the case of Germany – must play their role in supporting demand.

At a typical 5% annual real interest rate for risky cash flows, diverting that large a share of resources away from goods and services directly useful this year is a good bargain only if it boosts overall annual economic growth by 0.3% – or 6% per 25-year generation.

If prices are stable , a monetary asset with a nominal interest rate of 5 % provides a real yield of 2 ½%, allowing for a tax rate of 50 % on interest income .

To achieve the same real yield with an inflation rate of 5 %, the nominal interest rate would need to be 7 ½% after tax , or 15 % before tax .

There are in addition a number of other measures that can be taken that reduce the restrictions on investment and adjust, in a favourable way, real rates of return.

The nominal yield of longterm government bonds in Japan stood at 7,3% in the middle of 1984, implying a real yield of some 4£% (about half the US level); the public sector borrowing requirement in that country (central and local government plus public corporations) was equal to 6,9% of GNP last year, and yet it will be financed this year at a real interest rate about four points lower than that paid by the US Government.

A higher interest rate will encourage saving and will slow down growth, one that is lower will boost consumption and consequently growth since the interest on savings as a premium for postponed consumption is too small.

In a market characterized by interest rates near zero and negative real yields on the safest government bonds, investors will have to hunt for yield in other areas in order to meet their return targets while risk aversion remains high on average.

It has been realized that real interest rates of 2,5 - 3% have been the rule over the last decades.

An inflation rate of 1.5% and a real interest rate of 2.5% should result in a long-term capital interest rate of about 4%.

We expect bond yields and inflation to rise in parallel, so the level of real interest rates will remain at practically zero.

When you hold a checking or current account in your bank at a zero interest rate – as most people do in advanced economies – the real return is negative (the nominal zero return minus inflation): a year from now, your cash balances buy you less goods than they do today.