International Science Community Association Research Journal of Recent Sciences 2277 - 2502 3 4 2014 April 2 Relationship between Inflation and Interest Rate: Evidence from Pakistan 51 55 EN ZolfaghariZaferani Rashid 1 Faculty of Education And Consulting, Roudehen Branch, Islamic Azad University, Roudehen, IRAN Haji AliakbariNeda 2 HosseinRezaeiDolat Abadi 1 Islamic Azad University, Persian GULf International Educational Branch, Khuzestan, IRAN AliReza Eghbali 2 HassanHeidarySoltan Abadi 3 EspananiHamid Reza 1 Department of Biology, Faculty of Sciences, Payam Noor University of Iran, Employee social security, Isfahan, IRAN Shirani Kobra 2 Department of Pharmacodynamy and Toxicology, School of Pharmacy, Mashhad University of Medical Sciences, IRAN Khalilian Saadat 3 Department of Biochemistry, Faculty of Biological Science, Tarbiat Modares University, Tehran, IRAN Sadeghi Leila 4 Department of Biology, Faculty of Sciences, Payam Noor University of Iran, Isfahan, IRAN YousefiBabadiVahid 5 Physiology Research Center, Isfahan Cardiovascular Research Center, Isfahan Cardiovascular Research Institute, Isfahan University of Medical AmraeaiEsmaiel 6 Bansal A. 1 Department of ECE, G.L.A. University, Mathura, UP, INDIA Agarwal R. 2 Department of EIED, Thapar University, Patiala, Punjab, INDIA Sharma R.K. 3 School of Mathematics and Computer Applications, Thapar University, Patiala, Punjab, INDIA Paria Mohammadiha 1 Dept. of Educational Administration, Faculty of Psychology and Social Science, Central Tehran Branch, Islamic Azad University, Tehran, IRAN Mahdi Shariatmadari 2 Fereshteh Kordestani 3 Bakht Azam 1 Department of Computer Science, Islamia College Peshawar, Peshawar, K.P, PAKISTAN Qureshi RashidJalal 2 Faculty of Computing, SZABIST, Dubai International Academic City, Dubai, U.A.E Zahoor Jan 3 Department of Pathology, Lady Reading Hospital, Peshawar, K.P, PAKISTAN TajAli Khattak 4 Jafar Omari 1 Fazlzadeh Alireza 2 Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, IRAN MohammadrezaM. Nahidi 3 Economics and Management Faculty, Tabriz University, Tabriz, IRAN Subahana K.R. 1 CO Research and Green Technologies Centre, VIT University, Vellore, Tamil Nadu, INDIA Natarajan R. 2 Suman Bareth 3 Ayub G. 1 University of Swat, Khyber Pakhtonkhawa, PAKISTAN Rehman N.U. 2 Economics Department, University of Peshawar, Khyber Pakhtonkhawa, PAKISTAN Iqbal M. 3 Statistics Department, University of Peshawar, Khyber Pakhtonkhawa, PAKISTAN Zaman Q. 4 Atif M. 5 > Research Paper 2013 11 6 2014 April 2 This study focuses on the study of the causal relation of inflation rate with that of nominal interest rate in Pakistan. This is also known as Fisher hypothesis, which is used to study the equilibrium relation for long run between the inflation rate and the nominal interest rate in the time series data from 1973-2010. In this study, the Stationarity and non-Stationarity of the data is checked empirically using both ADF and PP test of unit root. Co-integration techniques like Johansen and Engle-Granger (Residual Based) co-integration test are used to study the long run relationship between the nominal interest rate and inflation. It is found that there exist a long run equilibrium relationship between the nominal interest rate and the inflation of Pakistan for the period of 1973-2010. Copyright@ International Science Community Association