In recent years in response to lower real GDP growth, higher cyclical unemployment and lower inflation the Reserve Bank of Australia lowered the cash rate from 2.75% to 0.25% in 2019.

In 2018 Peter Lim borrowed $25,000 from a bank at a fixed interest rate of 10%. As a result of the RBA policy the inflation rate increases from 1% to 3%. Is Peter 'better' or 'worse' off as a result? Briefly explain with reference to the real interest rate.