How do interest rates typically affect inflation in an economy?

Interest rates are the cost of borrowing money, and they play a big role in how much people spend and invest. When interest rates are low, it becomes cheaper to borrow money, which encourages people and businesses to take out loans and spend more. This increase in spending can lead to higher demand for goods and services, which may cause prices to rise, resulting in inflation. On the other hand, when interest rates are high, borrowing becomes more expensive, leading people to spend less, which can slow down inflation. For example, if a bank raises interest rates, a family might decide not to buy a new car because the loan would cost too much, leading to less demand and more stable prices in the car market.