A concept developed by Irving Fisher (1867–1947) which shows relationship between inflation and the interest rate, expressed by an equation popular as the fisher equation, i.e., the nominal interest rate on a loan is the sum of the real interest rate and the rate of inflation expected over the duration of the loan:  

R = r + F; where R = nominal interest rate, r = real interest rate and F = rate of annual inflation. 

Source: TMH Ramesh Singh