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fisher effect

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Financial Dictionary

Fisher Effect

A theory describing the long-run relationship between inflation and interest rates.

Investopedia Commentary

This equation tells us that, all things being equal, a rise in a country's expected inflation rate will eventually cause an equal rise in the interest rate (and vice versa).

Related Links

Forces Behind Interest Rates
All about Inflation Tutorial

See also: CPI, Deflation, Disinflation, Hyperinflation, Inflation, PPI, Reflation, RPI, Stagflation

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Financial Dictionary

Fisher effect

The direct relationship between inflation and interest rates. Increasing inflationary expectations result in increasing interest rates.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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