Sentence Correction

In hoping to restrain economic growth, interest rates were raised by British policymakers, making it more expensive to borrow for businesses and consumers.

(A) In hoping to restrain economic growth, interest rates were raised by British policymakers, making it more expensive to borrow for businesses and consumers.
(B) Making it more expensive for businesses and consumers to borrow, interest rates were raised by British policymakers, in hopes of their restraining economic growth.
(C) In making borrowing for businesses and consumers more expensive, British policymakers, in hopes they will restrain economic growth, had raised interest rates.
(D) Hopefully restraining economic growth, British policymakers raised interest rates, making more expensive borrowing by businesses and consumers.
(E) Hoping to restrain economic growth, British policymakers raised interest rates, making it more expensive for businesses and consumers to borrow.

My question is what does it refer to in the option A, B and E

AnjaliOberoi wrote:In hoping to restrain economic growth, interest rates were raised by British policymakers, making it more expensive to borrow for businesses and consumers.

(A) In hoping to restrain economic growth, interest rates were raised by British policymakers, making it more expensive to borrow for businesses and consumers.
(B) Making it more expensive for businesses and consumers to borrow, interest rates were raised by British policymakers, in hopes of their restraining economic growth.
(C) In making borrowing for businesses and consumers more expensive, British policymakers, in hopes they will restrain economic growth, had raised interest rates.
(D) Hopefully restraining economic growth, British policymakers raised interest rates, making more expensive borrowing by businesses and consumers.
(E) Hoping to restrain economic growth, British policymakers raised interest rates, making it more expensive for businesses and consumers to borrow.

A: In hoping to restrain economic growth, interest rates were raised.
B: Making it more expensive for businesses and consumers to borrow, interest rates were raised.
An introductory VERBing modifier must refer to the SUBJECT of the following clause.
In A and B, hoping and making seem to refer to rates, implying that RATES were HOPING and MAKING.
Neither is the intended meaning.
Eliminate A and B.

C: had raised interest rates
Here, there is no justification for the past perfect (had raised).

A RESULTATIVE adjective serves to indicate the RESULT of a preceding action.
John painted the room BLACK.
Here, the room is BLACK as a RESULT of the preceding action (John PAINTED).
Note that a resultative adjective FOLLOWS the modified noun.
D: making more expensive borrowing
Here, expensive serves as a RESULTATIVE ADJECTIVE and thus should FOLLOW the modified noun:
making borrowing more expensive
Eliminate D.

The correct answer is E.

OA: British policymakers raised interest rates, making IT more expensive for businesses and consumers TO BORROW.
Here, it serves as an EXPLETIVE.
An expletive is a placeholder pronoun.
Its purpose is to stand in for an infinitive phrase or a that-clause that FOLLOWS.
Here, the referent for it is to borrow.
Conveyed meaning:
making TO BORROW more expensive for businesses and consumers.

AnjaliOberoi wrote:In hoping to restrain economic growth, interest rates were raised by British policymakers, making it more expensive to borrow for businesses and consumers.

(A) In hoping to restrain economic growth, interest rates were raised by British policymakers, making it more expensive to borrow for businesses and consumers.
(B) Making it more expensive for businesses and consumers to borrow, interest rates were raised by British policymakers, in hopes of their restraining economic growth.
(C) In making borrowing for businesses and consumers more expensive, British policymakers, in hopes they will restrain economic growth, had raised interest rates.
(D) Hopefully restraining economic growth, British policymakers raised interest rates, making more expensive borrowing by businesses and consumers.
(E) Hoping to restrain economic growth, British policymakers raised interest rates, making it more expensive for businesses and consumers to borrow.

My question is what does it refer to in the option A, B and E

Whole underline sentence , there has to be sentence structure error at best.

(A) In hoping to restrain economic growth, interest rates were raised by British policymakers, making it more expensive to borrow for businesses and consumers.

hoping - is a verbing modifier and should make sense with Subject of the clause the verbing modifier is modifying so hoping should make sense with interest rates - Completely non sense - Incorrect.

(B) Making it more expensive for businesses and consumers to borrow, interest rates were raised by British policymakers, in hopes of their restraining economic growth.

Same issue with making and interest rates - incorrect.

(C) In making borrowing for businesses and consumers more expensive, British policymakers, in hopes they will restrain economic growth, had raised interest rates.

had is past perfect and should be used when the sentence is showing two actions occurred in two different time frames. No required in this sentence. - Incorrect

(D) Hopefully restraining economic growth, British policymakers raised interest rates, making more expensive borrowing by businesses and consumers.

Hopefully is completely wrong. "Hoping to restrain" verbing modifier make sense with the subject - "Bristish Policymakers".
British policymakers raised interest rates - which resulted into something - making - is correctly used.
"more expensive borrowing" is wrong. It should be "borrowing more expensive". The action of British Policymakers made borrowing more expensive for business and consumers.
Hence - Incorrect.

(E) Hoping to restrain economic growth, British policymakers raised interest rates, making it more expensive for businesses and consumers to borrow.

Perfect construction. Hoping is a verbing modifier modifies "British policymakers". making - verbing modifier modifies the result of "raising the interest rates". Hence correct.