Fisher effect
Tendency for nominal interest rate to follow changes in inflation / From Wikipedia, the free encyclopedia
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Not to be confused with the International Fisher effect.
In economics, the Fisher effect is the tendency for nominal interest rates to change to follow the inflation rate. It is named after the economist Irving Fisher, who first observed and explained this relationship. Fisher proposed that the real interest rate is independent of monetary measures (known as the Fisher hypothesis), therefore, the nominal interest rate will adjust to accommodate any changes in expected inflation.[1]