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The proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage. The interest rate is typically determined by a combination of market forces and monetary policy.
1
vote
Relation between Inflation and Bank deposit interest rate?
The US doesn't have a long time series of deposit interest rates available for free. However, they do have one month CD data from 1966 to 2013. This is a short term loan to a bank, that pays a slightl …
1
vote
The effect of Monetary Policy on Asset Price Inflation
My understanding of the effect of easing monetary policy on asset prices is that it can work through a more direct channel.
If markets are efficient and risk neutral then generally the value of an a …
31
votes
Why aren't house prices included in CPI?
The CPI stands for a Consumer Price Index. As in the price of things that are consumed (at a particular moment in time). Real estate prices are not the price of something consumed because they contain …
1
vote
Can holding interest rates at zero (ZIRP) for a very long time cause the deflation it is try...
While my answer would depend on how, why, and what the central bank said about why they pushed nominal interest rates to zero, I suspect in most situations the answer is no.
Consider the simplest cas …
5
votes
Why should I get a bond with negative interest instead of having a bank deposit account eith...
@Henry gives a good answer with lots of interesting reasons. However, there are lots macro-model setting where the demand for risk free assets is positive, even when the interest on savings is negativ …
3
votes
Why do banks offer less interest on larger deposits?
When you lend your money to a bank (by depositing it), they don't just make money off of lending out your money. They also make money out of charging you for banking services. If the bank makes more m …
14
votes
Accepted
Why lower the deposit rate if it is already negative?
You are assuming that the supply of deposits is zero when the price (the rate) is zero but it definitely is not. There are several reasons for this.
While you can withdraw cash from the bank it is un …
1
vote
Does commercial paper usually carry a higher yield than corporate bonds? Why?
Is this generally speaking true? My impression is that it is not. The following figure graphs the 10-Year High Quality Market (HQM) Corporate Bond Spot Rate (HQMCB10YR) against the 3-Month AA Nonfina …
1
vote
Why are the yields on short-term bonds more volatile than those of long-term bonds?
I believe "yield volatility" here means the realized variance in the interest rate.
Generally speaking, we think that the price of a bond will be the NPV of its cash flows:
$$ p = \sum_{\tau = 0} ^ {T …
1
vote
Bank rate and Repo rate
The Bank Rate / Discount rate is the interest rate charged by the central bank to member institutions for loans from the central bank. These are typically thought of as emergency funds to meet the liq …
2
votes
Is the loan principal ever delivered in pieces over time?
In the United States construction loans often work this way:
Once approved, the borrower will be put on a bank-draft, or draw,
schedule that follows the project's construction stages and will
…
1
vote
Why are the Fed's goals often described as the "dual mandate" and not the "triple mandate"?
As @Fizz suggests, the moderate long-term interest rates mandate is considered redundant:
Just how is the Fed supposed to serve the national interest with this
strange instrument called monetary …
1
vote
Accepted
Daily variable for inflation
The Billion Price Project offers what you want:
Daily price indices, monthly, and annual inflation rates for Argentina
and the US. Monthly data with annual inflation rates for Argentina,
Brazi …
1
vote
Can a government or central bank work to reduce inflation without hiking interest rates and ...
Yes, but only if you also introduce capital controls. You should check out the Mundell–Fleming trilemma:
The Impossible trinity (also known as the Trilemma) is a trilemma in
international econom …
3
votes
Steady-state savings rate
$\delta = 0.02$ is depreciation.
$p = 0.02$ is population growth.
$g = 0.03$ is technological growth.
$s = 0.14$ is the savings rate.
$Y=0.5\cdot K^{\frac{1}{3}}\left(AN\right)^{\frac{2}{3}}$ is the p …