I'm not an economics expert so I might be wrong but my understanding is that in basic terms...
When inflation is high, the Bank of England raises interest rates.
The idea behind this is that mortgage/rents rise so the average person has less disposable income and because savings rates increase in theory people choose to put money in savings instead of spending it.
This means less people spending money = less demand for goods and services
Less demand for goods and services = everyone lowers prices because they're competing for a smaller pool of buyers
...and 'ta da!' inflation reduces.
But this whole thing seems so hugely theoretical to me....has it ever been 'proven'?
It relies on humans to do what you think they'll do as though wider cultural influences play no part (for example the trend overall has been for spending, not saving so I'm not convinced people start suddenly saving more money that they hadn't planned to previously because the savings rate goes up?)
Also...if the causes of the inflation are global then the teeny tiny reduction in demand UK consumers would represent isn't going to impact inflation?
Anyone more into this kind of thing who can explain because it feels like an outdated, over generalised theory to me? Surely there's more concrete evidence that I don't know about though?