I was under the impression that in the long run, a larger money supply resulted in lower interest rates. According to the Quantity Theory of Money, see below figure, an increase in the money supply -> An increase in price levels.
Increasing price levels == increasing inflation rate.
According to the Fisher Effect:
Nominal Interest Rates = Real Interest Rates + Inflation
Changes in the money supply should not affect the Real Interest Rate in the long term therefore there is a 1 for 1 increase in Nominal Interest Rates and Inflation in order to maintain the equation.
The Chart suggests that an Increase in money supply => Higher prices == Inflation, which i believed meant lower interest rates.
But the Fisher Effect seems to be suggesting the opposite, hence my confusion.
I would appreciate any help in clarifying this, thanks in advance.