Is volatiity of interest rates (e.g., LIBOR) a pro-inflationary factor?

Question

Volatility of national currency rate is a pro-inflationary factor.

Answer 1

the volatility of interest rates can be a pro-inflationary factor depending on how the consumer sees future interest rates. ( there is a word for this but it escapes me at the moment) If the consumer expects the interest rate to increase in the long run then they will save more in the short run, hense reducing the overall money supply. in contrast if the consumer expects inflation rates to drop they will reduce savings and consume more in the short run hence reducing the money supply. the money supply is what dictates inflation so a volitile interest rate will cause cosumer confidence to be reduced so they will save less in general and can cause inflation, however the only way that a country can get volitility of interest rates is with an unstable centeral bank which is a sign of a bad economey in general. I hope this makes some sense to you.