Fisher Effect

The theory that 'real' (= excluding inflation) interest rates should be the same in different currencies.

From this theory it then follows that any observed differences in nominal interest rates (= including inflation) are explainable by differences between the inflation expectations for the two related currencies.

See also

• Carry trade
• Expectations theory
• Fisher Effect
• Four way equivalence model
• Inflation
• Interest rate parity
• International Fisher Effect
• Nominal rate
• Purchasing power parity
• Real rate