We are sometimes asked how we could have raised interest rates when the economy was slowing, but when inflation is sticky and even rising despite slowing growth, more and more monetary accommodation has adverse longer-run consequences. If above-target inflation  6  BIS central bankers’ speeches  becomes the “new normal”, longer-term interest rates will quickly rise in response.
Lenders expect to be compensated for inflation and inflation risk. In turn, the share of current income that we need to spend on servicing debt increases, draining resources from other priorities, like investment. So it is clear that we need to focus on doing things that reduce the general level of lending rates instead of permanently raising them.