The assumption that if the price level is expected to rise by one percent, the nominal interest rate will also rise by one percent (more widely often according to the formula: real yield/return = (1 + nominal yield/return) / (1 + annual inflation) – 1). This one-to-one relationship has been widely confirmed statistically in the long run. – See real interest rate. – Cf. Monthly Report of the Deutsche Bundesbank, July 2001, p. 35 (explanation).
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