6. The real risk-free rate is 2.85%. Inflation is expected to be 3.85% this year, 4.35% next year, and 2.1% thereafter. The maturity risk premium is estimated to be 0.05 (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Do not round intermediate calculations. Round your answer to two decimal places.

7. Due to a recession, expected inflation this year is only 3.25%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3.25%. Assume that the expectations theory holds and the real risk-free rate (r*) is 2.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 2.0%, what inflation rate is expected after Year 1? Round your answer to two decimal places.