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
High interest rat also have a major impact on the giant corporations. Most of them run their day-to-day business on huge loans. That money now is a lot more expensive to borrow, so companies borrow/spend/expand less overall. This takes money out of the economy and can lead to lowering inflation.
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