Please explain to me like I am three.
The explanation I have received is:
Everyone saved loads during the pandemic and the government printed and handed out loads of money.
So, there is too much money sloshing about in the economy, causing prices to rise (inflation) and so the government put interest up to stop people spending and borrowing more.
Except that bit about there being loads of money so needing to reign everyone in doesn't make sense to me. Everyone I know is financially stretched.
As far as I see it prices going up has nothing to do with people ‘having too much money’. So why is higher interest rates the answer?
I don’t geddit.