Explain how the interest rate control the inflation

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how the interest rate control the inflation?
Acc to lot of theories when the interest rate rises, then the corporates stops taking the loan with which the liquidity in the mkt. decreases which increases the value of money and hence inflation will decreased but to the contrary if the corporate takes he loan at high interest rate, then being a business for profit making, it will pass the increased interest rate to the consumers which helps in increasing the inflation.

Reference no: EM13243219

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