Real Interest Rates by Country in 2025

What We're Showing

This chart shows real interest rates by country in 2025, calculated by subtracting inflation from nominal policy interest rates.

The data comes from the IMF's World Economic Outlook, April 2025 edition.

Key Takeaways

• Russia tops the list with a real interest rate of 14.5%, with the central bank raising interest rates in an effort to combat persistent high inflation.
• Brazil (9.2%) and Mexico (5.3%) also maintain high real rates to keep inflation in check and to reduce currency volatility.
• The U.S. real rate sits at 1.5% amid cooling inflation and cuts in the Fed funds rate, which is down from 5.5% in August 2024 to 4.5% in March 2025.
• Japan is the outlier with a negative real rate of -2.1%, continuing its ultra-loose monetary stance to boost economic growth and encourage investment.

Context

The real interest rate is the inflation-adjusted cost of borrowing, and highlights the true incentive to spend or save.

High real interest rates encourage saving as people can earn higher interest on their deposits. On the contrary, low interest rates encourage people to borrow, invest, and spend, often resulting in a boost to economic growth.

Central banks typically adopt high interest rates to tame inflation by slowing down economic activity and reducing spending, which can help to cool down the rise in prices of goods. In many developed economies like the United States, the ideal rate of inflation is typically around 2%, which is lower than current levels.