Iceland | Real interest rate (%)

Real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator. The terms and conditions attached to lending rates differ by country, however, limiting their comparability. Development relevance: The banking system's assets include its net foreign assets and net domestic credit. Net domestic credit includes credit extended to the private sector and general government and credit extended to the nonfinancial public sector in the form of investments in short- and long-term government securities and loans to state enterprises; liabilities to the public and private sectors in the form of deposits with the banking system are netted out. Net domestic credit also includes credit to banking and nonbank financial institutions. Domestic credit is the main vehicle through which changes in the money supply are regulated, with central bank lending to the government often playing the most important role. The central bank can regulate lending to the private sector in several ways - for example, by adjusting the cost of the refinancing facilities it provides to banks, by changing market interest rates through open market operations, or by controlling the availability of credit through changes in the reserve requirements imposed on banks and ceilings on the credit provided by banks to the private sector. The real interest rate is used in various economic theories to explain such phenomena as the capital flight, business cycle and economic bubbles. When the real rate of interest is high, that is, demand for credit is high, then money will, all other things being equal, move from consumption to savings. Conversely, when the real rate of interest is low, demand will move from savings to investment and consumption. Statistical concept and methodology: Many interest rates coexist in an economy, reflecting competitive conditions, the terms governing loans and deposits, and differences in the position and status of creditors and debtors. In some economies interest rates are set by regulation or administrative fiat. In economies with imperfect markets, or where reported nominal rates are not indicative of effective rates, it may be difficult to obtain data on interest rates that reflect actual market transactions. Deposit and lending rates are collected by the International Monetary Fund (IMF) as representative interest rates offered by banks to resident customers. The terms and conditions attached to these rates differ by country, however, limiting their comparability. Real interest rates are calculated by adjusting nominal rates by an estimate of the inflation rate in the economy. A negative real interest rate indicates a loss in the purchasing power of the principal. The real interest rates are calculated as (i - P) / (1 + P), where i is the nominal lending interest rate and P is the inflation rate (as measured by the GDP deflator). In 2009 the IMF began publishing a new presentation of monetary statistics for countries that report data in accordance with its Monetary Financial Statistical Manual 2000. The presentation for countries that report data in accordance with its International Financial Statistics (IFS) remains the same.
Publisher
The World Bank
Origin
Republic of Iceland
Records
63
Source
Iceland | Real interest rate (%)
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
9.71322293 1996
9.8658507 1997
7.70544702 1998
9.46976949 1999
12.28092481 2000
8.50591652 2001
8.96792018 2002
11.40205425 2003
9.09827331 2004
11.36328502 2005
8.55512701 2006
14.33644941 2007
7.14395433 2008
7.38502029 2009
3.65536909 2010
4.46319256 2011
4.72101403 2012
5.90173989 2013
3.45764446 2014
1.46667926 2015
5.84368814 2016
6.26018301 2017
4.21253039 2018
2.38684775 2019
1.67655584 2020
-1.02564284 2021
-1.21383988 2022

Iceland | Real interest rate (%)

Real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator. The terms and conditions attached to lending rates differ by country, however, limiting their comparability. Development relevance: The banking system's assets include its net foreign assets and net domestic credit. Net domestic credit includes credit extended to the private sector and general government and credit extended to the nonfinancial public sector in the form of investments in short- and long-term government securities and loans to state enterprises; liabilities to the public and private sectors in the form of deposits with the banking system are netted out. Net domestic credit also includes credit to banking and nonbank financial institutions. Domestic credit is the main vehicle through which changes in the money supply are regulated, with central bank lending to the government often playing the most important role. The central bank can regulate lending to the private sector in several ways - for example, by adjusting the cost of the refinancing facilities it provides to banks, by changing market interest rates through open market operations, or by controlling the availability of credit through changes in the reserve requirements imposed on banks and ceilings on the credit provided by banks to the private sector. The real interest rate is used in various economic theories to explain such phenomena as the capital flight, business cycle and economic bubbles. When the real rate of interest is high, that is, demand for credit is high, then money will, all other things being equal, move from consumption to savings. Conversely, when the real rate of interest is low, demand will move from savings to investment and consumption. Statistical concept and methodology: Many interest rates coexist in an economy, reflecting competitive conditions, the terms governing loans and deposits, and differences in the position and status of creditors and debtors. In some economies interest rates are set by regulation or administrative fiat. In economies with imperfect markets, or where reported nominal rates are not indicative of effective rates, it may be difficult to obtain data on interest rates that reflect actual market transactions. Deposit and lending rates are collected by the International Monetary Fund (IMF) as representative interest rates offered by banks to resident customers. The terms and conditions attached to these rates differ by country, however, limiting their comparability. Real interest rates are calculated by adjusting nominal rates by an estimate of the inflation rate in the economy. A negative real interest rate indicates a loss in the purchasing power of the principal. The real interest rates are calculated as (i - P) / (1 + P), where i is the nominal lending interest rate and P is the inflation rate (as measured by the GDP deflator). In 2009 the IMF began publishing a new presentation of monetary statistics for countries that report data in accordance with its Monetary Financial Statistical Manual 2000. The presentation for countries that report data in accordance with its International Financial Statistics (IFS) remains the same.
Publisher
The World Bank
Origin
Republic of Iceland
Records
63
Source