Raising interest rates can help control inflation by making borrowing more expensive. When interest rates are high, it becomes more expensive for businesses and consumers to borrow money, which can lead to a decrease in spending.
This decrease in spending can slow down the economy, which in turn can slow down the rate of inflation. Additionally, higher interest rates can make it more attractive for people to save money, rather than spend it, which can also help to decrease inflation.
Central banks, such as the Federal Reserve in the United States, will raise interest rates as a tool to control inflation. When inflation is too high, it means that the cost of goods and services is rising too quickly, which can lead to economic instability and harm people’s ability to afford basic necessities.
Raising interest rates can help slow down the economy and decrease inflation by making borrowing more expensive, which can decrease spending and slow down the rate at which prices are increasing. Additionally, higher interest rates can also make it more attractive for people to save money, rather than spend it, which can also help to decrease inflation.