I recently watched a podcast which raised some interesting questions about whether high interest rates have paradoxically caused stickier inflation in the recent years. The accepted conventional wisdom is that when inflation shoots up in an economy the prescription is always higher interest rates regardless of what caused that inflation in the first place. Higher interest rate increases the cost of credit thus prompting individuals and businesses to consume less and incentivising them to save instead or so the accepted wisdom goes. This prescription looks at the symptom which is the inflation and ignores the root cause. Inflation could be caused by supply chain bottle necks, supply disruption or over consumption to name but a few. The inflationary cycle that started around end of 2021 or so was primarily triggered by supply chain disruptions caused by covid shutdowns and later exarcerbated by the increase in energy prises caused by Russia - Ukraine war. Sure, people who could not go ou...