Korkoprosentti

Korkoprosentti, commonly translated as interest rate, is the percentage charged on borrowed funds or earned on deposited funds over a stated period, typically one year. It is usually expressed as an annual rate and applied to loans, deposits, or investments.

There are several distinctions. A nominal interest rate is the stated rate before adjusting for inflation, while a real interest rate accounts for inflation. Simple interest is calculated only on the principal, whereas compound interest accrues on accumulated interest. Rates can be fixed for a period or change over time (variable or floating). For consumer budgeting, APR (annual percentage rate) or APY (annual percentage yield) are common measures used in loan agreements and savings products.

Determining korkoprosentti involves factors such as credit risk, term length, liquidity, and market conditions. At the macro level, central banks influence rates through policy decisions, while banks add credit risk premia and term premia to reflect their expectations of future costs and risks.

Shifts in korkoprosentti affect borrowing costs, consumer spending, investment, and inflation. Higher rates generally reduce borrowing and slow economic activity, while lower rates stimulate demand but can raise inflation or asset prices.

In Finland, korkoprosentti operates within the euro area framework. The European Central Bank sets the main policy rate, and Finnish banks adjust their loan and deposit rates accordingly, offering products such as mortgages, personal loans, and savings accounts with stated rates.

Related topics include inflation, monetary policy, real interest rates, and the distinction between APR and APY.