The policy rate minus core inflation
The policy rate less core inflation over the past year: how hard monetary policy is braking. It triggers when it is a point above its ten-year mean and the central bank is still raising.
A policy rate means little on its own. Four percent is tight when core prices rise one percent a year and loose when they rise seven. Subtracting core inflation gives the real rate, the return a saver actually earns and the cost a borrower actually pays, which is what slows spending. Economists compare it with a neutral rate that nobody observes; worldstat.us compares it with its own ten-year mean instead, so every region has a baseline that fits its history and nothing is estimated.
The rule has two parts. The level: the real rate is more than one point above its ten-year mean. The impulse: the policy rate is higher than it was six months earlier. Both must hold to trigger. A high real rate on its own, as in 2024 when inflation fell while rates were held, puts the series on Watch; a central bank that is still raising into a real rate already above its norm is applying the brake, and that is the condition that has preceded most recessions in the sample. The construction follows a reviewer's suggestion, September 2026, and is a worldstat.us rule with no published track record of its own.
Core inflation is used for every region that publishes it; India uses the headline rate. China's series uses the one-year loan prime rate, the benchmark for bank lending, since the People's Bank steers that rate rather than an overnight one; its record starts in 2019, so the series is context until a ten-year mean exists.
On this site
- Real policy rate China +2.00 % Context
- Real policy rate Eurozone 0.00 % Triggered
- Real policy rate India +0.29 % Context
- Real policy rate Japan −1.66 % Normal
- Real policy rate United Kingdom +0.95 % Watch
- Real policy rate United States +1.43 % Triggered
Related terms
core CPI · credit impulse · policy rate · recession