Rates that is actually

Nominal
agreed and paid

Usually decreases over time as Real and nominal interest rates

prices rise due to inflation Not only the nominal payment that is important to both
Purchasing power of money borrowers and savers, but also how many goods, services Real
or other things they could buy with that money
Real interest rate = nominal interest rate - inflation

Republic act 7653 To promote price stability Is fixed

Focused mainly on achieving a Interest rate

low and stable inflation Primary objective of BSP

April 12
Adoption of inflation targeting
Inflation targeting
framework of monetary policy Money supply Reserve requirement
BSP uses a combination of Through monetary policy
monetary policy instrument Open market operations Buying and selling government

When the price of goods moves in a Goal: control inflation

predictable rate to protect the Price stability
value of your money

Concerns with the inflation Uses policy rate to control How does the BSP
outlook and target period monitor inflation targeting promote price stability

When there is a pressure for

prices to go up, they will
increase interest rate