If the government or the bank increasing the interest rate to tackle inflation so that people would have less money to spend and the hoping the prices coming down. Wouldn’t it be easy to let people have the money so that they can spend during inflation rather than giving away in name of interest rate?
In: Economics
>Wouldn’t it be easy to let people have the money so that they can spend during inflation rather than giving away in name of interest rate?
No. That runs counter to the whole idea. With raising the interest rate, you WANT consumers to pare back on borrowing/spending, so that the economy slows down and inflation comes down with it.
If you give consumers money, they will spend it, which only exacerbates the issue.
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