Conventional wisdom has it that the best way to beat inflation is to raise interest rates. It makes sense—a rapidly growing economy creates increased demand for goods and services and heightened demand strains supply. Prices increase as a result. “From an Economics 101 perspective, in the last 100 years, every time we’ve had an inflationary environment and interest rates have risen it’s supposed to slow down inflation because money becomes more expensive,” says Dan Fischer, president and chief executive officer at Citizens State Bank.
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