How can we get negative **real** interest rate? According to Fisher's equation,

Real interest rate=Nominal interest rate - expected inflation rate

So, how can we get negative real interest rate? I'm in doubts. On one hand, purely from algebraic point of view it seems that expected inflation rate must be higher than nominal interest rate. BUT, I know that expectations of such high inflation would cause the nominal interest rate to adjust accordingly, to be higher than expected inflation rate. So such situation would appear to be impossible when inflation rate is expected.

On the other hand, replacing "expected" with "actual" turns the tables. If high inflation rate caught us by suprise it's totally possible for nominal interest rate to be lower than inflation. BUT Fisher's equation uses only expected inflation as its argument, not actual inflation. We don't have any right to supply Fisher's equation with unexpected actual inflation.
There is a market for inflation-linked bonds. The quoted yield on the bonds is the equivalent of a real yield, with the inflation rate corresponding to expected inflation.

The real yields On US inflation-linked bonds are currently negative. Link to FRED data.

There is no mystery to this.


Nominal yields are effectively pinned to the expected path of the nominal policy rate.
Inflation rates follow developments in the economy.
There is no law of nature that says that the nominal yield has to be above the rate of inflation.