What is one common solution addressed in economics for high inflation?

Raising interest rates is a commonly recommended solution to combat high inflation because it helps to reduce spending and investment in the economy. When interest rates are increased, borrowing becomes more expensive for consumers and businesses. This typically leads to a decrease in consumer spending on big-ticket items that often require financing, such as homes and cars. At the same time, businesses may scale back on investments, as the cost of financing capital projects becomes higher.

By reducing the overall level of demand in the economy, higher interest rates aim to cool off price increases. When demand decreases, it places less upward pressure on prices, which can help bring inflation down to more manageable levels. This strategy aligns with the broader economic principle that managing monetary policy through interest rates is a key tool for central banks in controlling inflation.