On the De Nederlandsche Bank website, locate the section explaining inflation. Identify the European Central Bank's target inflation rate. Additionally, describe how the central bank uses interest rate adjustments (both increases and decreases) as a tool to influence and manage inflation in the economy.
Navigate to dnb.nl. Click on 'Thema's' (Themes). Click on 'Actuele economische vraagstukken' (Current economic issues). Click on 'Inflatie' (Inflation). Locate the ECB's target inflation percentage. Identify and explain how interest rate increases affect inflation. Identify and explain how interest rate decreases affect inflation.
Successfully navigate to the 'Inflatie' page. State that the ECB's target inflation is 2%. Explain that an interest rate increase makes borrowing more expensive and saving more attractive, leading to less spending, decreased demand, and a decrease in inflation. Explain that an interest rate decrease makes borrowing cheaper and saving less attractive, leading to more spending, increased demand, and an increase in inflation.