"It's just someone's opinion" In this case it's Damodaran's opinion, so yeah, it matters, like, a lot. "Interest rates aren't directly set by central banks"

"It's just someone's opinion" In this case it's Damodaran's opinion, so yeah, it matters, like, a lot. "Interest rates aren't directly set by central banks" The "risk-free" interest rate for a country is. All other rates are derived from it (see CAPM). Interest rates for any loan, or cost of capital for any enterprise is the risk-free rate plus the risk premium. "what real rates are if you do not have a consistent, repeatable, uncorrupted measure of inflation?" You can use a lot of proxies for that, and you'll see cases where there are major disagreements between what the market sees as inflation and what the government says it is (see Venezuela and Argentina, for example, http://www.economist.com/node/21548242 http://www.economist.com/node/21548242). That aside, the market usually has a fair trust of statistical institutions that calculate inflation, because that data is quite transparent.