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Learn About Nominal Interest Rate: Definition and Meaning in Economics

Written by MasterClass

Last updated: Oct 12, 2022 • 5 min read

When you invest money into an interest-bearing account, you expect your balance to increase with time. Such an increase owes to two factors: the real interest rate paid by your investment account, and the overall rate of inflation. When you combine those two factors, you get what’s known as the nominal interest rate.