The bank is paying 1179 compounded annually The inflation is

The bank is paying 11.79% compounded annually. The inflation is expected to be 11.83% per year.

What is the market interest rate?

Formula is

1+market interest rate = ( 1+ real interest rate )* (1 + inflation)

Here bank pays real rate of return = 11.79 % = 0.1179

Inflation = 11.83% = 0.1183

Put values in the formula we get

1 + market interest rate = (1+0.1179)*(1+0.1183)

1 + market interest rate = 1.25014757

Market interest rate = 0.25014757

Convert in percentage, we get

Market interest rate = 25.04%