An economy overheating due to full employment and increasing productivity induces higher rates to cool it down. However is that not part of a slow cycle? Spending power is increasing creating demand before the rising rates take full affect.
In the short run increased productivity (that creates the need for higher rates) causes demand pressures that outweigh the negative impact of higher cost of capital - therefore prices increase (inflation) until the point where belts tighten. The wash through to belt tightening due higher cost of capital can take a while to show up.
An added complication is cash flowing in from foreign investors attracted to the higher rate. That cash will be put to use in the economy, presumably.
A very complex game, every action has a reaction elsewhere in the economy both domestically and globally.
To make some sort of sense out of movements I try to look at relativity. Real/Nominal rates relative to other parts of the world. It will always be a best guess unless one has a superhuman brain able to compute a multitude of data coming from every corner of the globe in an instant (and make sense of it)!
