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Economics question...

Could someone please explain to me why, if prices on everything go up due to inflation and people are having trouble affording the things they need, why does the gov't raise the interest rates and tell us it is to help curb inflation? Seems to me by raising the interest rates, they are adding to the list of things we can't afford.

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BizSuitStacy · M

Higher interest rates reduce the demand for cheap loans. This ultimately reduces the money supply, driving down inflation.

Carissimi · F

Except they keep printing money out of thin air, then send it to Ukraine. @BizSuitStacy

BizSuitStacy · M

@Carissimi Which is why inflation continues. Inflation is 100% about the money supply.

Wiseacre · F

👍well said!@BizSuitStacy