Search: Nominal interest rate
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RBA Glossary definition for Nominal interest rate
Nominal interest rate – The nominal interest rate refers to the cost of borrowing money before adjustment for inflation i.e. it includes compensation for the expected erosion of the value of the borrowed funds due to inflation. It is the cost visible to the borrower, and is composed of the real interest rate plus inflation.
RBA Glossary definition for interest rate
interest rate – The term used to describe the cost of borrowing money or the return to the owner of the funds which are invested or lent out. It is usually expressed as a percent per annum of the amount of money borrowed, lent or invested.
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References
21 Jun 2023
RDP
2023-05
Brunnermeier MK and Y Koby (2018), ‘The Reversal Interest Rate’, NBER Working Paper No 25406. ... Lopez JA, AK Rose and MM Spiegel (2020), ‘Why Have Negative Nominal Interest Rates Had Such a Small Effect on Bank Performance?
https://www.rba.gov.au/publications/rdp/2023/2023-05/references.html
The Impact of Interest Rates on Bank Profitability: A Retrospective Assessment Using New Cross-country Bank-level Data
21 Jun 2023
RDP
2023-05
Given the stock of variable-rate loans is larger than the flow, lower interest rates are expected to lower provisions. ... With lower short-term interest rates compressing NIMs, banks reacted by increasing loan volumes, which were funded at the MRO rate.
https://www.rba.gov.au/publications/rdp/2023/2023-05/full.html
Channels of Monetary Policy to Bank Profitability
21 Jun 2023
RDP
2023-05
Given the stock of variable-rate loans is larger than the flow, lower interest rates are expected to lower provisions. ... The extent to which some banking systems use interest rate swaps to hedge this risk will also cause differences in the pass through
https://www.rba.gov.au/publications/rdp/2023/2023-05/channels-of-monetary-policy-to-bank-profitability.html