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Correct, if the interest rate is fixed. Otherwise the same market forces captured by the inflation rate is also pressuring the interest rate paid on loans. Put

• AnthonyMouse 7y ago
  That's assuming interest rates are set by the market rather than the Fed. In the latter case it's often the opposite which is true -- the Fed sets a low interest rate which in principle causes inflation and wage growth as people borrow money and spend it. Moreover, the bank doesn't care that much that you're paying back the loan in less valuable money because they never actually had the money they loaned you to begin with. Having money in a bank account is you loaning the bank money, taking out a loan is the bank loaning you money, so as long as the money they loaned you is still in somebody's bank account they just cancel out. It's the person holding the cash in their account, not the bank, who is eating the currency devaluation.