Assume that the interest rate offered on pounds is 5 percent and the pound is expected to depreciate by 1.5 percemt. For the international Fisher effect (IFE) to hold between the United Kingdom and the United States, the U.S. interest rate should be ____.

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According to the International Fisher Effect (IFE), the difference in nominal interest rates between two countries is equal to the expected change in exchange rates between their currencies. If the UK interest rate is 5% and the pound is expected to depreciate by 1.5%, the US interest rate should be approximately 3.43% (5% - 1.5%).

Assume That the Interest Rate Offered on Pounds Is 5