what is the difference between a real or a nominal interest rate 
a real interest rate is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor a nominal interest rate refers to the interest rate before taking inflation into account 2 nominal can also refer to the advertised or stated interest rate on a loan without taking into account any fees or compounding of interest 