What is the primary goal of anti-inflation policies?

The primary goal of anti-inflation policies is to stabilize prices and maintain purchasing power. Inflation can erode the value of money, meaning consumers are able to buy fewer goods and services with the same amount of money over time. Anti-inflation measures aim to control the rate at which prices increase, ensuring that the currency retains its purchasing power, which is essential for the overall health of the economy. By maintaining price stability, these policies help consumers and businesses make informed decisions and foster an environment conducive to economic growth.

In contrast, increasing the money supply can often exacerbate inflation rather than control it. Raising interest rates significantly is a tool used in anti-inflationary measures, but the ultimate aim is not just to raise rates but to achieve price stability. Stimulating consumer spending, while beneficial during periods of low demand, can contribute to inflationary pressures if the economy is already operating at or above its potential output. Thus, the primary focus of anti-inflation policies remains on stabilizing prices and safeguarding purchasing power.