Treasury Inflation-Protected Securities (TIPS) yields give a market estimate of real rates; the difference between nominal and TIPS yields (the breakeven) is the market’s expected inflation.
How to use the Fisher Equation Calculator
- Solve for
- Nominal interest rate
- Real interest rate
- Inflation rate
Results update as you type, and every field accepts the units shown in its menu.
How it works
Choose what to solve for and enter the other two values.
Inputs explained
| Field | What to enter |
|---|---|
| Solve for | Choose one: Nominal interest rate, Real interest rate, Inflation rate |
| Nominal interest rate | In % |
| Real interest rate | In % |
| Inflation rate | In % |
Example values
How the main result changes when Nominal interest rate changes and everything else stays at the example values above:
| Nominal interest rate (%) | Result (%) |
|---|---|
| 3 | 5.06 |
| 4.5 | 5.06 |
| 6 | 5.06 |
| 7.5 | 5.06 |
| 9 | 5.06 |
| 12 | 5.06 |
Formula
(1 + i) = (1 + r) × (1 + π)
i = (1 + r)(1 + π) − 1; r = (1 + i) ÷ (1 + π) − 1; π = (1 + i) ÷ (1 + r) − 1
Worked example
Inputs: Solve for: Nominal interest rate; Real interest rate: 2 %; Inflation rate: 3 %.
Results: Result = 5.06 %; Solved for = Nominal interest rate.
Frequently asked questions
What is the Fisher equation?
(1 + nominal) = (1 + real) × (1 + inflation).
What is the simplified Fisher equation?
Nominal ≈ real + inflation.
How is it used?
To convert between nominal and real returns and to infer inflation expectations.