I think this is wrong. On the contrary, increasing the interest rate is one of the most common tools to combat inflation. Increasing the interest rate means reducing the money supply, which means reducing spending, which hopefully means falling down of the prices of goods and services.
Thanks for the input.Yeah I've read it somewhere in macro economy books on the subject about monetary policy and inflation, it's true increasing the inflation rate will reduce the money supply and reduce spending. But it's only for short term solution, because in the long run retailers will bankrupt and companies will fire their workers, it will cause a huge economy problem and government may likely print new money to donate the jobless or they will protest due to lost trust on the government.
You are correct and this is most likely what might happen.
The rates are causing less people to buy goods and services. So soon businesses will need to lay off some people. Then there will be a recession and how will the fed fix it? By cutting rates and printing money again. And it’ll be a complete repeat.
This is why many are predicting a repeat of 1970s where we got inflation waves and might hit double digit inflation this time around.
