The central bank has an inflation target. Inflation rises above the target. What will happen next to interest rates and aggregate demand?

Central banks try to control inflation using monetary policy. In Britain the emphasis today is almost exclusively on the interest rate. To reduce the rate of inflation the central bank will raise interest rates. This means that aggregate demand will fall, first because it is more expensive to borrow money, and second because households with mortgages will have to use more of their incomes to service their mortgages.