What does The Fisher Effect mean？

The Fisher Effect is an economic theory that suggests there is a direct relationship between inflation and nominal interest rates. According to the Fisher Effect, real interest rates (the nominal interest rate minus the inflation rate) remain constant over time, while nominal interest rates increase in response to inflation. In other words, as inflation rises, nominal interest rates must also rise to maintain a constant real interest rate. The Fisher Effect is named after economist Irving Fisher, who first proposed the theory in the early 20th century.