The real interest rate is 0.095. By deducting the inflation rate from the nominal interest rate, one can compute the real interest rate, which is the nominal interest rate less the inflation rate.
The relationship between inflation and both real and nominal interest rates is described by Irving Fisher's economic theory, the Fisher Effect. According to the Fisher Effect, the real interest rate is the nominal interest rate less the expected inflation rate.
Therefore, unless nominal interest rates rise at the same rate as inflation, real interest rates decrease as inflation rises.
The real interest rate can be calculated by deducting the anticipated inflation rate from the nominal interest rate, according to Fisher's equation. All of the rates are compounded in this equation.
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