There is a negative relationship between real interest rates and inflation rates.

Question

Quizplus · Accepted Answer

Real interest rates are adjusted for inflation, so if inflation increases, the real interest rate effectively decreases if the nominal rate doesn't change. However, this doesn't imply a direct negative relationship between the two; instead, central banks may raise nominal interest rates to combat high inflation, which can lead to higher real interest rates if inflation expectations are managed effectively.

There Is a Negative Relationship Between Real Interest Rates and Inflation