Absolute Rate
Definition
An interest rate given as a straightforward percentage figure, not compared to or based on any other benchmark rate.
Example
Example 1:
When a Nigerian bank tells a customer their savings account earns 12% per year with no reference to CBN’s monetary policy rate, that 12% is an absolute rate, plain and simple.
Example 2:
When a US mortgage lender offers a home loan at a fixed 6.5% per year without linking it to the Federal Reserve’s benchmark rate, that 6.5% is an absolute rate.