If expected inflation is constant, then when the nominal interest rate falls, the real interest rate It rises more than changes in nominal interest rates.
In finance and economics, the nominal interest rate or nominal interest rate is one of two different things. interest rate before adjusting for inflation. Or for interest rates "as stated" without adjusting for the full effect of compound interest.
Nominal interest rates can be affected by a variety of factors, including supply and demand for money, federal government actions, central bank monetary policy, and many other factors. Central banks introduce short-term nominal interest rates as an instrument of monetary policy.
Interest rates can be expressed in nominal or real terms. The nominal interest rate is the real interest rate plus the expected inflation rate. Real interest rates reflect the true cost of funding for borrowers and the real rate of return for lenders or investors.
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