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nominal interest rate
(redirected from Nominal Interest Rates)

   Also found in: Medical, Wikipedia 0.01 sec.
Nominal interest rate
The interest rate unadjusted for inflation.

Nominal Interest Rate
The interest rate on an investment or loan without adjusting for inflation. The nominal interest rate is simply the interest rate stated on the loan or investment agreement. If one makes a loan at a high nominal interest rate, this does not guarantee a real profit. For example, if the nominal interest rate on a loan is 7% and the inflation rate is 4%, the real interest rate is only 3%.

nominal interest rate
The stated rate of interest, exclusive of any compounding, that is paid on an investment. Annual interest of $80 on a $1,000 investment is a nominal rate of 8% whether the interest is paid in $20 quarterly installments, in $40 semiannual installments, or in an $80 annual payment. Use of nominal rates can be misleading when comparing returns from different investments. See also effective rate of interest.

nominal interest rate

The stated interest rate in a note, which may differ from the true (effective) interest rate because of discounting or fees.



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Further disinflation with short-term nominal interest rates at zero would mean rising real interest rates in the face of a slowing pace of recovery," Bullard said.
The authors of the 2001 paper--Jess Benhabib at New York University and Stephanie Schmitt-Grohe and Martin Uribe both now at Columbia University--studied abstract economies in which the monetary policymaker follows an active Taylor-type monetary policy rule--that is, the policymaker changes nominal interest rates more than one for one when inflation deviates from a given target.
Examination of data in Figure 1 indicates that nominal interest rates in Nigeria have not been stable in recent times, except for years before 1986 when deregulation policy was adopted.
 
 
 
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