My understanding of the interest rates part of monetary policy is the follows:
Borrower's point of view:
An increase in interest rates, increases the cost of borrowing, which may reduce disposable income, causing a reductiong in aggregate demand. The equillibrium between supply and demand will therefore need to be adjusted resulting in a lower average prices (less inflation).
Saver's point of view:
As interest rates rise, the reward for saving increases, therefore people are incentivised to save their money, which may cause a decrease in disposable income and less inflation.
However, I have a question in my textbook which says how can a rise in interest rates cause higher inflation in the short term, and I'm not sure.