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Well there are two ways monetary policy (MP) effects inflation. 1/. Indirectly - via its effect on aggregate demand (AD) + economic activity 2/. Directly - by influencing expectations. In the example rates were rising - contractionary MP How or why would AD increase? How or why would...

Id love to post up a step by step for why thats not the case but I dont think it would have any benefit. You've got your own opinion, that great - without that we'd all be lemmings.

I think I know what you were trying to get at, but could you clarify it ? Contractionary monetary policy (where interest rates rise) is also known as deflationary monetary policy. It aims reduce the level of aggregate demand in the economy and therefore slow down the rate of growth of...