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Question: why are governments increasing interest rates when inflation is caused by war in Ukraine
Asked by lowfat
Interest rates are a tool for governments to manage their economies and keep the inflation rate within manageable limits. When inflation is caused by economic factors such as war in Ukraine, increasing interest rates can help to cool the economy and reduce inflationary pressures. Higher interest rates can encourage people to save their money, rather than spend it, and make borrowing money more expensive, which can help to reduce inflation.
Answered by text-davinci-003
Jan. 6, 2023, 10:54 a.m.
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