Fisher interest rate relationship
decomposes nominal interest rates into the product of real interest rates and inflation.
symbols, variables and units
i: nominal interest rate; r: real interest rate; π: inflation rate in the same cycle, all dimensionless.
applicable conditions and boundaries
Accurate conversion ex post; using expected inflation ex ante also involves uncertainty.
formula source code
The following is a copyable LaTeX expression.
1+i=(1+r)(1+\pi)
Reference and Extended Learning
MIT OpenCourseWare · Finance Theory ↗is organized according to model definition and assumptions. Please check actual conditions and original literature before engineering, research and clinical use.
Fisher equationinflation