I always was taught that inflation is impacted by interest like so:
Lower interest rate => Loaning money is cheaper => More money in the system => Higher inflation
However recently I am also hearing opposite theories as to how lower interest rate can lead to lower inflation.
I found some discussions and explanations but all of them stretch several paragraphs. Is there a short and easy to follow logic like the one I just quoted that can explain this directional impact?
I won’t prevent people from adding context or evaluation as to when each direction is relevant, but please make sure this is clearly separated from the actual impact explanation.