Nominal interest rates are the stated rates on loans or investments, not adjusted for inflation. They represent the cost of borrowing or the return on investment in percentage terms. For example, a loan with a nominal interest rate of 5% means you pay 5% interest on the principal amount annually. These rates are used in financial contracts and are distinct from real interest rates, which account for inflation. Nominal rates are important for understanding the face value of interest without considering the eroding effect of inflation on purchasing power.