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Consider the following spot interest rates for maturities of one, two, three, and four years.    r1...

Consider the following spot interest rates for maturities of one, two, three, and four years.

   r1 = 4.7%    r2 = 5.2%     r3 = 5.9%     r4 = 6.7%

Assuming a constant real interest rate of 2 percent, what are the approximate expected inflation rates for the next four years?

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Answer #1

✓ Inflation rate

Year 1 = 2.7%

Year 2 = 3.2%

Year 3 = 3.9%

Year 4 = 4.7%

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