Policy interest rates have wide reaching impacts across society, sometimes second and third order effects that can be hard to predict. Generally though, increasing interest rates encourages more saving instead of borrowing. Less borrowing means less aggregate spending. The overall effect is that people buy less stuff (lower demand). This lowers prices if the supply stays the same.

If it helps anyone at all, I recently published a new post on rising interest rates & what effects they might have: https://ericvanular.com/rising-interest-rates

Companies and individuals with adjustable rate debt are going to feel this increase. For companies it not only impacts their interest rate, but also their ability to stay ‘in convenient’ with their loan agreements, and to obtain renewals. It means less discretionary cash for their customers as well. Those of us old folks who vaguely recall the early 1980’s remember the follow-on impact of successive rate increases - and make no mistake the Fed is just getting started; and is being joined by other countries engaging in similar efforts to control inflation.

Can anyone please explain why the graph shows a 0.25% rate increase, yet the headline describes a 0.5% rate increase? I'm sure I'm being a moron and missing something.

They didn't really have another choice and yet, "iceberg, meet titanic"