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.

YearNominal_Interest_RateInflation_Rate
20047.257507.44462
20059.071669.06332
200610.987507.92108
200711.768337.59868
200812.9358320.28612
200914.5375013.64776
201014.0425013.88113
201114.4191611.91676
201213.519169.68505
201311.985837.68950
201411.730007.19167
201510.155832.53951
20168.755003.75259
20178.210004.08537
20188.530835.07805
DMCA.com Protection Status