What I understand is, it goes like this, when you get good interest in banks, you start saving, that pull down the cash from the market, Also when loan is available at cheap interest, people start taking loan for every damn reason, which also increases the demand in the market and so the prices.
Now come to your loan aspect, now since the interest has gone up, you will very soon cut down on your luxury expenses and will concentrate on necessities and loan repayment. This way it will again bring down the demand and so price.
But the only negative aspect is, more interest rate means industries have to pay more on borrowings and so it might put industries to decide on whether to increase the prices or keep the price same as demand is reduces and bear the less profit.
So this whole process lows down the economy a bit.
It is not so simple but this is the basic theory, but if you add consume behavior in it, things become more complex
