Balancing Monetary Supply: The Role of Interest Rate Hikes and Cuts in Combating Inflation

With the frequent occurrence of social emergencies, inflation has become a worldwide concern. To solve this problem, the article analyzed the influence of the policy of raising and lowering interest rates. The most important thing is finding the best method to reduce the inflation problem. The article selected and analyzed the impact of two monetary policies on domestic and foreign countries, and it was supported by Keynesian theory and Fisher's equation. The result showed whether hiking or cutting interest rates alone influences the economy. To maintain the stability of the money supply, it is necessary to alternate interest rate hikes and interest rate cuts to ensure the balance of the money supply. The method is significant to maintain the healthy development of the global economy, As the economic landscape continues to evolve in complexity, ongoing research and adaptive policymaking will prove indispensable in navigating these challenges effectively and continued exploration and refinement of these strategies also will be key to fostering resilient global economies.