Due to a recession, expected inflation this year is only 2.75%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 2.75%. Assume that the expectations theory holds and the real risk-free rate ( r) is 1.5%. If the yield on 3 -year Treasury bonds equals the 1 -year yield plus 1.5%, what inflation rate is expected after Year 1 ? Round your answer to two decimal places. % Due to a recession, expected inflation this year is only 2.75%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 2.75%. Assume that the expectations theory holds and the real risk-free rate ( r) is 1.5%. If the yield on 3 -year Treasury bonds equals the 1 -year yield plus 1.5%, what inflation rate is expected after Year 1 ? Round your answer to two decimal places. %