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Real Rates in the Long Run

Notes on the Week Ahead

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The Story of Real Rates Since the 1950s

Since the core CPI series starts in January 1957, the first real rate we can calculate is for January 1958. Real rates were also stable, at close to 2%, from 1958 to 1973. Collapsed in the inflationary 1970s as inflation consistently supplied surprised bondholders on the upside. Bolted higher in the early 1980s, drifted down for almost 40 years before collapsing again when economy experienced a surge in inflation due to effects of pandemic and war on Ukraine.

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