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nominal interest rate

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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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net (Staff Writer) Barclays Capital said it is launching the Barclays Capital Emerging Markets Asia Swap Index Family; which it says are investable indices designed to replicate the performance of nominal interest rate swaps in the Asian emerging markets.
First, shrinking prices push up the real cost of borrowing, which is defined as the difference between nominal interest rates and the expected inflation rate; if the latter is (increasingly) negative, the difference produces an ever higher real interest rates, which encourage saving over spending and investment.
According to the referred source, a 1% drop in the nominal interest rate can be linked with 1/2% to 1% rise in property prices after 1 year.
 
 
 
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