31. But what if aggressive easing does not work, and the economy is dead in the water with zero nominal interest rates? 32. Looking forward into the future, the expected real interest rate is approximately the nominal interest rate minus the expected inflation rate. 33. If there is a negative real interest rate, it means that the inflation rate is greater than the nominal interest rate. 34. To compare the change in purchasing power, the real interest rate ( nominal interest rate minus inflation rate ) should be used. 35. Looking back into the past, the " ex post " real interest rate is approximately the historical nominal interest rate minus inflation. 36. This has permitted substantial reductions in nominal interest rates to levels which, in some cases, are below those prevailing before the crisis. 37. See nominal interest rate, real interest rate and effective interest rate .-- talk ) 12 : 59, 15 September 2008 ( UTC) 38. In not raising nominal interest rates, it has allowed real interest rates to fall, which seems hardly suitable for America's steaming economy. 39. Rising inflation, coupled with falling nominal interest rates could bring real interest rates down to dangerously low levels of below 5 %, 40. When inflation is sufficiently low, the real interest rate can be approximated as the nominal interest rate minus the expected inflation rate.
