Simplistically, when a central bank sets a low interest rate, retail banks can borrow cheaply but get a poorer return on deposits. In turn, consumers have lower loan rates and poorer savings rates, and are therefore incentivized to borrow and spend, powering the economy. The reverse is true when interest rates are high. So, a central bank concerned about an over-heating economy could increase rates, making borrowing more expensive and providing an incentive to save, helping lower spending.