Global economic gloom from the IMF. But has it just issued the biggest stock market 'buy' signal since 2009? And some thoughts on social media bile and hatred.
"Interest rates to fall to pre-pandemic levels"
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Surely you don’t use “actual” inflation (i.e. last quarterer’s) to calculate the 10 year real interest rate?
In the US and the UK there’s enough index linked bonds to calibrate real interest rates. The FT used to publish the 10 year break even inflation rate for the UK, which is backsolving the 10 inflation expectation from 10 year index linked and conventional bonds. A handy number for a quick forward looking stat.
In the eurozone national governments borrow using index linked bonds linking to their own domestic indices which differ from one another. This makes it very difficult to derive real future interest rates, but a few agencies like Moody’s manage to pull something together which so broadly representative of a eurozone inflation curve. But you can’t just lift that and use it in an Irish context given that the NTMA don’t do Irish index linked bonds (they might have done one before), and given that Irish inflation will differ to Italian, etc..
This causes considerable torment for lowly number crunching actuaries looking to price a pension scheme where members were given benefits linked to Irish CPI.