Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation.
This is used in relation to "effective interest rate" or "real interest rate."
" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.
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A nominal interest rate is an interest rate that does not factor
in the rate on inflation. Nominal interest rate could also refer to
an interest rate that does not adjust for the full effect of
compounding.
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A nominal interest rate is an interest rate that does not factor
in the rate on inflation. Nominal interest rate could also refer to
an interest rate that does not adjust for the full effect of
compounding.
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A real interest rate and a nominal interest rate are quite
similar. The only real difference between the two interest rates
are that a nominal interest rate include the cost of inflation
where as the real interest rate does not.
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Nominal interest rate referes to the rate of interest prior to
taking inflation into account. Depending on its application, an
inflation and risk premium must be added to the real interest rate
in order to obtain the best nominal rate.