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when prices are not getting higher but lower.

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16y ago

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Inflation in Japan is negative, Japan had deflation. Meaning the cost of everything is falling, rather than increasing.


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The real interest rate can be negative when the nominal interest rate is lower than the inflation rate. This scenario means that the purchasing power of money decreases over time, as inflation erodes the value of returns on investments or savings. For example, if a savings account offers a 2% nominal interest rate while inflation is at 3%, the real interest rate is -1%. Negative real interest rates can incentivize spending and investment rather than saving, as holding cash results in a loss of value.


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