RBA Official Discusses Effectiveness of Interest Rates in Controlling Inflation Amidst External Shocks

A Reserve Bank of Australia (RBA) official, Sarah Hunter, stated that interest rates have proven to be an effective tool for central banks globally in controlling inflation, despite the process not being painless. She acknowledged that while government spending is a factor in demand, the RBA, as an independent central bank, focuses on the imbalance between demand and supply to tackle inflation. Hunter also noted the impact of external shocks, such as the oil shock, on domestic prices.