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The first is that the real interest rate can be quite responsive to cyclical shocks, sometimes moving by a percentage point or more in a matter of months. Indeed, in the past few months we have seen a relatively sharp and sizable increase. Whether such movements persist depends on the underlying shocks driving real interest rates. For example, we saw a similar rise in the ten-year real interest rate after the global financial crisis and that did not persist when inflation returned to target. The second observation is that, beneath the month-to-month volatility, there appears to have been a fairly steady downward trend since the mid-1980s. As shown in Chart 2 other economies have experienced a similar trend in real interest rates. [5]  Page 5  Chart 1: The UK ten-year real interest rate has fallen over recent decades  Note: Ten-year zero coupon yield (spot interest rate) computed from UK index-linked government debt. See yield curves. Source: Bloomberg Finance L.P, Tradeweb and Bank calculations. Chart 2: There has been a trend decline in real interest rates in most countries  Note: High-income countries include Finland, France, Italy, Japan, Netherlands, Spain, the United Kingdom and the United States. See Appendix A.2 to Bailey et al. (2022) for data definitions. Source: Authors’ calculations using EU KLEMS, the Penn World Table 10.0 and the Jordà et al. (2017) Macrohistory Database. See Appendix A.1 to Bailey et al. (2022) for more details.