nominal interest rate

(redirected from Nominal Interest Rates)

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 INTEREST RATE paid on a LOAN without making any adjustment for the effects of INFLATION. Contrast REAL INTEREST RATE.

nominal interest rate

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

References in periodicals archive ?
My starting point to characterizing the nature of monetary policy across countries is the standard Taylor rule (1993), which specifies a link among nominal interest rates, inflation, and the output gap.
The report elaborated that keeping the nominal interest rates relatively high has contributed to stabilising the international reserves above $44bn since April 2018, after being $15bn in the summer of 2016.
As also reported in Table 3, the model reproduces rather well the mild comovement between nominal interest rates and inflation observed in the 1991-2011 period (Gibson paradox).
House prices reflect nominal interest rates as well as real interest rates.
Nominal interest rates are subject to a physical lower bound.
With inflation likely to stay low, this implies continued low nominal interest rates, raising the threat that in periods of economic weakness the Federal Reserve is likely to again face the zero lower bound problem.
A top official with the IMF said, 'Although the experience with negative nominal interest rates is limited, we tentatively conclude that overall they help deliver additional monetary stimulus and easier financial conditions.'
A more sophisticated argument against Joan Robinson's claim would be that nominal interest rates don't matter, and that real interest rates are the proper measure of the stance of monetary policy.
"The continuing ZIRP in the G-7, far from putting dangerous upward pressure on inflation, may be leading us to an outcome with low nominal interest rates and low inflation that can last for a very long time," he said.
Before the recession, nominal interest rates in these countries were around 4 percent.
We implement a VAR methodology to analyze sources of the short-term nominal interest rates volatility in the European transition economies.
Inasmuch as the co-movement of nominal stock returns and nominal interest rates could be due to changes in expected inflation, the hypothesis is tested using real as well as nominal return data.