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EconomicsFisher Equation
By Sitraka Forler · Lecturer, Durham Business SchoolUpdated 13 September 2026 About this site
Links nominal interest rates, real rates, and inflation.
The nominal rate roughly equals the real rate plus expected inflation. It explains why a 5% savings rate during 6% inflation actually loses purchasing power (a −1% real return). Essential for comparing returns across inflationary regimes.
Formula / theory
(1 + i) = (1 + r)(1 + π) ⇒ r ≈ i − π
In Python
real_rate = (1 + nominal_rate) / (1 + inflation) - 1