Inflation and interest ratesThis is off topic for sure, but I was reading about the relation between rising the interest rates and lowering inflation.
It turns out that the simplistic explanation is that by raising interest rates, the banks put their clients in a position of having no choice but to cut back on purchases, And in turn this slows down the economy and suppliers must lower their prices to go ahead.
For me it is alot of BS.
Banks lowered their interest rates to encourage spending and the recent never ending rising value of real estate left consumers with the impression that they were worth more and go ahead and spend.
Now that the greedy suppliers (Food and Gas) have raised their prices to catch up for their losses during the pandemic, that sent cost of living prices (inflation) skyrocketing to a point where we now have to eat baloney instead of steak, GVT steps in to pressure banks to increase their interest rates.
The interest rates should not have gone below 3 to 4 % in the first place.
A complete "Gong Show"
For sure GVT officials could have seen this coming a long tive ago.