Monday 27 April 2015

Short Cut Money Rate Calculation

Short Cut Money Rate Calculation

We know that money rate is combination of real rate and inflation rate. Therefore the money rate can be calculated by simply adding both rates. However, for more accurate calculation fisher formula may be used.

Example of Money Rate

Inflation rate is 4% and real rate expectation is 3%. Then money rate would be (3%+4%) = 7%