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the claim
Raising interest rates causes higher inflation.
the verdict
CONTESTED PARTIAL
Recorded sources
2 sources for · 5 against
Is it true that raising interest rates causes higher inflation?
Partly. The retrieved items do not settle the general claim. One economics Q&A describes a short-term channel by which higher interest rates can raise measured inflation, while several papers report the conventional direction (inflation driving nominal rates, or rate hikes curbing inflation) and one empirical study rejects the Neo-Fisherian idea that raising rates raises trend inflation.
Verdict: CONTESTED PARTIAL · 2 sources for, 5 against · Last checked
Evidence for · 2
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Monetary Policy - How can increasing interest rates cause higher inflation in the short term?. (2016). economics.stackexchange.com. https://economics.stackexchange.com/questions/11422/monetary-policy-how-can-increasing-interest-rates-cause-higher-inflation-in-th
Evidence against · 5
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Inflation. (n.d.). en.wikipedia.org. https://en.wikipedia.org/wiki/Inflation
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More for · 1
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Garín, J., Lester, R., & Sims, E. (2016). Raise Rates to Raise Inflation? Neo-Fisherianism in the New Keynesian Model. nber.org. https://www.nber.org/papers/w22177
More against · 4
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Interest rates, inflation, and exchange rates in fragile EMEs: A fresh look at the long-run interrelationships. (2019). shs.hal.science. https://shs.hal.science/halshs-02095652v2
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The Neo-Fisherian hypothesis: empirical implications and evidence?. (2018). doi.org. https://doi.org/10.1007/s00181-018-1591-8
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Significant Policies Have the Federal Reserve Enacted to Control Inflation from the Pandemic. (2024). doi.org. https://doi.org/10.54097/5z9d3n24
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Inflationary expectations, money growth, and the vanishing liquidity effect of money on interest : a further investigation. (1985). fraser.stlouisfed.org. https://fraser.stlouisfed.org/files/docs/publications/frbrichreview/rev_frbrich198503.pdf
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