The central bank controls inflation by influencing interest rates.
What are the three ways the central bank can combat inflation?
Various Instruments the Federal Reserve Uses to Control Inflation,
The Fed has a number of instruments that it has historically used to control inflation. The Federal Funds Rate, the Discount Rate, and Open Market Operations (OMO) are frequently used in tandem.
The implementation of monetary policy by central banks is a crucial function in achieving price stability (low and stable inflation) and aiding in the management of economic volatility.
Controlling the economy's money supply is a key monetary strategy for reducing inflation.
Interest rates are impacted by the central bank, which in turn manages inflation.
