Government rules to fight inflation can include:
Monetary Policy: This means that central banks, like the Bank of England, can raise interest rates. When they do this, it makes borrowing money more expensive. This helps people spend less. For example, if inflation is 5%, raising the interest rate to 6% might help make things more stable.
Fiscal Policy: This is when the government changes tax rates or spends less money. The goal is to slow down a busy or “overheated” economy.
These actions aim to keep inflation close to a target, which is usually around 2%.
Government rules to fight inflation can include:
Monetary Policy: This means that central banks, like the Bank of England, can raise interest rates. When they do this, it makes borrowing money more expensive. This helps people spend less. For example, if inflation is 5%, raising the interest rate to 6% might help make things more stable.
Fiscal Policy: This is when the government changes tax rates or spends less money. The goal is to slow down a busy or “overheated” economy.
These actions aim to keep inflation close to a target, which is usually around 2%.