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Inflation is a tricky issue.

A low and stable rate of inflation is considered healthy


since it implies that economic expansion is present. There is no fixed percentage
denoting healthy inflation although the benchmark of 2% seems like a convention
nowadays. One way to tackle inflation, especially that caused by too high demand
is for central banks to raise interest rates, thus raising the cost of borrowing,
discouraging investments, encouraging people to save, hence reducing demand
in the economy, hence bringing down inflation levels.

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