nominal interest rate


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nominal interest rate

the real rate of interest plus the anticipated rate of price inflation.
References in periodicals archive ?
Growing confidence in economic expansion and falling unemployment has raised investors' expectation of future inflation, pulling up the nominal interest rate on ten-year bonds.
And in low rate environments savers and intermediaries trying to meet unrealistic nominal interest rate targets may settle for inadequate compensation for extra risk they are taking.
Such a large negative number for the nominal interest rate is implausible.
Bullard noted that the Federal Open Market Committee (FOMC) operates by setting a short-term nominal interest rate (i.
One of the most popular and enduring views in all of monetary economics since the 1970s, and indeed since the 1940s, has been that a nominal interest rate peg is poor monetary policy and that attempts to pursue such a policy would lead to ruin.
The maturity of the first tier, worth of USD1 billion, will be after five years from the date of issue with nominal interest rate of 3.
Taylor rule refers to a monetary policy tenet that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output or other economic conditions.
As emphasized by Friedman (in his eleventh proposition) and by Allan Meltzer, nominal interest rates are not good indicators of the stance of policy, as a high nominal interest rate can indicate either monetary tightness or ease, depending on the state of inflation expectations.
One way to estimate the natural rate is to take the long-range federal funds rate projection of Federal Open Market Committee members as a measure of the long-term nominal interest rate, and subtract the Committee's inflation objective, since it is anchoring longer-run inflation expectations.
Louis President James Bullard has released results of research that examines options for optimal monetary policy when the short-term nominal interest rate targeted by monetary policymakers (the policy rate) remains effectively at zero.
The real 10-yr treasury rate, which is the nominal interest rate minus the rate of inflation, was 0.
A very low -- or even negative -- nominal interest rate could produce a positive real return for a saver, if prices fall sufficiently.