Does anyone understand this country’s finance system?

Can someone please explain to me the logic behind raising interest rates to control inflation. Obviously there are better minds than mine at work here but that defies common sense – when interest rates go up we pay more for house loans, companies pay more interest so there is a good chance they will put up prices – is that not inflation?
I can understand that higher interest rate encourage people to save and for some that is good, but most people are in the group that, if they have any savings they are minimal and they have to dig in to them to pay the extra interest on loans, which of course are always higher than that given on savings.
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