Demand-pull inflation  cause reduction in interest rate it is the upward pressure on prices that follows a shortage in supply. Economists describe it as "too many dollars chasing too few goods."Demand-pull inflation is a tenet of Keynesian economics that describes the effects of an imbalance in aggregate supply and demand. When the aggregate demand in an economy strongly outweighs the aggregate supply, prices go up.This is the most common cause of inflation.