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Supply Side Inflation Not Solved By Raising Interest Rates

6 mins 7 mths

America and Australia share similar symptoms in their economies right now with high inflation sticking around. The central banks have been raising interest rates in a traditional monetary policy approach to combatting high inflation. However, it isn’t working that great. Supply side inflation not solved by raising interest rates. Both nations are suffering with housing shortages pushing up rents and this is contributing to the high inflation. Putting up interest rates is not going to help with this; indeed, it is making the situation worse. Making building houses more expensive via higher costs of doing business is not going to increase the supply of housing.

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