Editing Fisher effect (section)

{{short description|Tendency for nominal interest rate to follow changes in inflation}}
{{Distinguish|text = the [[International Fisher effect]]}}

In [[economics]], the '''Fisher effect''' is the tendency for [[nominal interest rate]]s to change to follow the [[inflation|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 [[Neutrality of money|independent of monetary measures]] (known as the '''Fisher hypothesis'''), therefore, the nominal interest rate will adjust to accommodate any changes in [[inflation expectations|expected inflation]].<ref>{{cite book |last1=Frank |first1=Robert |last2=Bernanke |first2=Ben |last3=Antonovics |first3=Kate |last4=Heffetz |first4=Ori |title=Principles of Macroeconomics |publisher=McGraw-Hill |pages=138–139}}</ref>