One idea at a time

Plain explanations of the language behind the news.

Inflation

A sustained increase in the overall level of prices. The same amount of money buys less than before.

The price of borrowing money, usually expressed as a percentage per year. It is also a payment a saver may receive.

A unit for changes in a percentage rate. One basis point is 0.01 percentage points.

A measure of the return a bond offers at its current price. Yield depends on both its payments and what someone pays for it.

How easily something can be turned into spendable cash without a large loss in value. It can also describe access to funding.

A central bank buys financial assets to influence financial conditions, often when short-term policy rates are already low.

Earnings before interest, taxes, depreciation and amortization. It is one measure of a company’s operating performance.

The amount by which government spending exceeds revenue over a period. It is a flow, rather than the total stock of debt.

A comparison of bond yields at different lengths of time until repayment. It often describes government bonds.

Central-bank actions intended to make financial conditions more restrictive, often to reduce inflation pressure.

A company’s share price multiplied by the number of its outstanding shares. It measures the market value of its equity.

The value of final goods and services produced within an economy over a period. It is one measure of economic activity.

A measure of average price changes for a basket of consumer goods and services. It is commonly used to track inflation.

The price of one currency in terms of another. Always check which currency is being priced.

Interest earns further interest when it stays invested. Growth depends on the rate, timing and compounding frequency.