Hi, Can someone explain to me how raising interest rates is supposed to reduce inflation?
(I presume that the logic goes like this:- higher interest rates mean borrowing is more expensive, hence less will be borrowed, which in turn means lower investment and less economic activity). What I fail to see is why one would want to suppress economic activity, as a means of fighting inflation. It seems like a blunt instrument to me. Regards, Robin van Spaandonk <[EMAIL PROTECTED]>
