Also, higher interest rates flow through to those with existing loans and also if/when they refinance. From businesses to credit cards, payday loans, probably even pawn shops. Even the government itself.
If you have to pay more on your loan, you have less to spend on everything else.
So, interest rate rises also put a handbrake on spending, which slows down the economy, and attempts to slow down inflation too. In theory.
Stay tuned next week where we learn about how once you get inflation reducing, it usually means a rise in unemployment!
The good times never end
When an expert was contacted for comment about why the rocket exploded, Katy Perry said "Cause, baby, you're a firework!"