Which of the following circumstances allows the Fisher equation to account for negative nominal interest rates?

Rapid interest rate growth typically indicates a rising nominal interest rate environment. This scenario does not directly facilitate the possibility of negative nominal interest rates; rather, it suggests that nominal rates are increasing, which contradicts the circumstances where negative rates would be applicable.

While inflation expectations rising above the treasury interest rate can affect real yields, it does not inherently allow for negative nominal rates. This situation usually results in positive nominal rates, as investors demand compensation for anticipated inflation, which does not align with the conditions necessary for negative rates.

This condition indicates a policy intent to raise interest rates rather than allowing for negative nominal rates. If the targeted rate is higher than the current rate, it suggests a future expectation of increased nominal rates, which does not support the occurrence of negative rates.