As per Fisher Effect, higher inflation leads to higher nominal interest rates.
Nominal interest rate is the lending rate of interest. It is the rate of interest at which you can borrow money.
Fisher effect is the part of Fisher equation which was proposed by Irving Fisher.
Applying the Fisher Effect on actual data of Pakistan, it is confirmed that the nominal interest rates do follow the rate of inflation.
| Year | Nominal_Interest_Rate | Inflation_Rate |
| 2004 | 7.25750 | 7.44462 |
| 2005 | 9.07166 | 9.06332 |
| 2006 | 10.98750 | 7.92108 |
| 2007 | 11.76833 | 7.59868 |
| 2008 | 12.93583 | 20.28612 |
| 2009 | 14.53750 | 13.64776 |
| 2010 | 14.04250 | 13.88113 |
| 2011 | 14.41916 | 11.91676 |
| 2012 | 13.51916 | 9.68505 |
| 2013 | 11.98583 | 7.68950 |
| 2014 | 11.73000 | 7.19167 |
| 2015 | 10.15583 | 2.53951 |
| 2016 | 8.75500 | 3.75259 |
| 2017 | 8.21000 | 4.08537 |
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