4  BIS central bankers’ speeches  Table 2 Transmission to the money market rates was much faster than to lending rates  Nominal or real interest rate? Another aspect of monetary transmission is whether it is the nominal interest rate or the real interest rate that can influence growth and investment.
In the literature, the stance of monetary policy is judged as loose or tight depending on the level of real policy rate. Most economists believe that it is the real interest rate that could influence real economic activity.4 However, as individuals and corporates we take economic decisions looking at the nominal rates as these are the rates that we can observe.