If both borrowers and lenders agree on a nominal interest rate, but the actual inflation rate ends up being lower than expected, who benefits from this outcome?

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Neither party benefits since the nominal rate is contractually fixedAll parties remain unaffectedBorrowers benefit while lenders lose outLenders benefit at the expense of borrowersInflation impacts both parties equally

Explanation

When inflation is lower than anticipated, the real interest rate is higher than expected, which advantages lenders and disadvantages borrowers because the nominal interest rate was agreed upon beforehand.