If a central bank implements contractionary monetary policy and raises interest rates, what is the primary effect this action aims to achieve in the economy?

When a central bank raises interest rates through contractionary monetary policy, it aims to reduce inflation in the economy. Higher interest rates make borrowing more expensive, which means people and businesses are less likely to take out loans for spending or investment. As a result, overall spending decreases, leading to lower demand for goods and services. For example, if a family decides not to buy a new car because of higher loan costs, this reduced spending can help slow down rising prices. Ultimately, the central bank hopes that by controlling inflation, the economy will remain stable and healthy in the long term.