Nominal Interest Rate

Definition

The nominal interest rate refers to the percentage increase in money value that a lender receives from a borrower as compensation for lending money.

Related terms

Real Interest Rate: The nominal interest rate adjusted for inflation.

Federal Reserve (Fed): The central bank of the United States responsible for setting monetary policy and controlling interest rates.

Loanable Funds Market: A market where borrowers and lenders interact to determine the interest rate and quantity of loanable funds exchanged.