Nominal interest rate is a nominal interest rate without adjusting inflation factor, that is, nominal interest rate includes inflation rate. The real interest rate refers to the real interest rate that depositors or investors get interest returns after excluding the inflation rate.

I. Conversion formula between nominal interest rate and real interest rate

1, the actual interest rate when interest is calculated multiple times a year: periodic interest rate = nominal interest rate/interest calculation times a year = r/m; The effective interest rate =[ 1+(r/m)]m- 1.

Calculate the interest several times a year, and the annual interest rate given is the nominal interest rate, while the ratio of the annual interest rate calculated according to compound interest to the principal is the real interest rate.

2. Nominal interest rate and real interest rate under inflation.

Real interest rate =( 1+ nominal interest rate) ÷( 1+ inflation rate)-1

Second, for example.

The bank has two loans with the amount of 1 1,000 yuan. Other factors such as interest rate and term are the same, but the frequency of interest payment is different. Loan A pays interest once a year, and loan B pays interest twice a year. Obviously, for banks, loan B is more profitable, and for borrowers, loan A is more cost-effective. This leads to nominal interest rate and real interest rate.

The interest rate mentioned here does not consider the broader financial market for the time being. For example, nominal interest rate and real interest rate considering inflation are two concepts in financial markets. If we use the concept of financial market to explain the term "Rp" here, we can understand that the term interest rate is a complex average in a sense.