Problem 6.10 (Inflation) Question 10 of 10 Check My Work (No more tries available) eBook Due to a recession, expected inflation this year is only 3%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3%. 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 2.5%, what inflation rate is expected after Year 1? Round your answer to two decimal places. %