Real Interest Rate Formula : Nominal Interest Rate Intelligent Economist - Next, the expected level of inflation is 2%.
Real Interest Rate Formula : Nominal Interest Rate Intelligent Economist - Next, the expected level of inflation is 2%. . Real interest rate, whether expected or actual, is equivalent to the nominal interest rate after the percentage of inflation or deflation has been deducted. If an investor expected a 7% interest rate with inflation at 2%, the real interest rate would be 5% (7% minus 2%). The equation states that the nominal interest rate is equal to the sum of the real interest rate plus inflation. Next, the expected level of inflation is 2%. The real interest rate is calculated as the difference between the nominal interest rate and the inflation rate. The real rate of return calculation formula (known as fisher equation) is as follows: R = real rate of return. The real interest rate is calculated as the difference between the nominal interest rate and the inflation rate. About press copyright contact us creators advertise developers terms privacy policy & sa