A bank which is considering a fixed rate, three year loan to a customer requires a 2% per annum real return and makes the following inflation rate forecasts: Year 1: 1.5% Year 2: 1.2% Year 3: 2.0% What is an appropriate three year interest rate for the loan?

Sep 8, 2023

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A bank which is considering a fixed rate, three year loan to a customer requires a 2% per annum real return and makes the following inflation rate forecasts: Year 1: 1.5% Year 2: 1.2% Year 3: 2.0% What is an appropriate three year interest rate for the loan?
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