Inflation is defined as an increase in the price paid or a decrease in the purchasing power of money. In other words, price inflation occurs when prices rise or when more money is needed to purchase the same item. Interest rates are raised to moderate demand and inflation and are reduced to stimulate demand. Monetary policy aims to influence the overall level of monetary demand in the economy so that it grows substantially in line with the economy's ability to produce goods and services. This prevents production from increasing too quickly or slowly. If rates are set too low, this could encourage inflationary pressures to build; if they are set too high, demand will be less than necessary to control inflation. Changes in demand and production then impact the labor market – employment levels and wage costs – which in turn influence producer and consumer prices. When the Fed increases the discount rate, it does not have an immediate impact on the stock market. Changes in the official bank rate therefore influence the whole range of interest rates set by commercial banks, building societies and other financial institutions for their savers and borrowers. It will affect the interest rates charged for overdrafts and mortgages, as well as savings accounts. A change in the official bank rate will also tend to influence the price of financial assets such as bonds and shares, and the exchange rate. These changes in financial markets affect consumer and business demand and, consequently, production. Changes in the official bank rate take time to have their full impact on the economy and inflation. Some influences, such as those on the exchange rate, act very quickly. In January 2003, the price of oil increased by 76.82% compared to the previous January. These have been some speculations recently about the correlation between a sharp increase in oil prices and a sharp decline in stock prices. According to the theory, a sharp increase in oil prices, between 50% and 100% annual increase, has historically resulted in a sharp decline in the stock market price..