Graph of the Day

Mike Smitka

This graph shows:

1. the nominal interest rate, here on 3-month Treasury bills (which are short-maturity US government bonds and typically have the lowest interest rate among similar maturity instruments),
2. the corresponding 3-month rate of inflation for the economy as a whole, in the form of the quarterly GDP implicit price deflator [which is thus much broader than the CPI measure of inflation, as befits an economy-wide interest rate, and which carries an odd name tied to the technical use that motivated developing the measure], and
3. the difference of the two, the "real" interest rate.

Note that you can drag the bar at the bottom to narrow the time frame. If you hover over a line on the graph, it will give you the values and date. If you hover over the series name, that series will be highlighted in the graph.

What has happened these past 10 years to the real interest rate? Is it "normal" (I won't try to define today) for real interest rates to be negative?

Next up: why focus on "core" CPI?