Here's the theory. The economy is "too hot", there's too much money circulating, and as a result demand increases which drives up prices. By making money more e

Here's the theory. The economy is "too hot", there's too much money circulating, and as a result demand increases which drives up prices. By making money more expensive, by raising interest rates, that money is taken out of circulation because it's more expensive and demand decreases which drives down prices. That's how things work in a normal market. Bottom line: economy is too "hot", i.e. high inflation, you raise rates. If you want to "juice" the economy then you lower rates.