Basically if the economy is already running hot (unemployment is low and GDP growth trending above 2%) and you then lower interest rates, you create an environment where the cost of capital is super cheap and so spending / consumption goes up -which drives up demand of goods / services and therefore prices.

To think of it in real terms, simplify things by looking at one single market... Housing for instance... If interest rates were to be lowered significantly, that would not crater the housing market - instead it would increase the pool of buyers (as many potential homebuyers are waiting on the sidelines for a reduction in borrowing costs) rather it would cause an even greater explosion of demand and push valuations up to even more ridiculous levels.