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The rate of interest will be 0.65%
The interest rate is the percentage added to the loan's principal by the lending institution. A depositor with a bank or other financial organization can expect to receive interest, a form of income that takes into account the time worth of money.
According to the Fisher Effect, the real interest rate is the nominal rate of interest less the predicted rate of inflation. As a result, unless nominal interest rates rise by the same amount as inflation, real interest rates decline.
Short-term nominal interest rates are pegged to the federal funds rate, which is determined by the Federal Reserve and serves as the basis for interest rates paid by other banks and financial institutions. Instead of focusing on the nominal interest rate, which does not take inflation into account, investors should look at the real interest rate.
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