RBA’s Bullock: Supply shocks are difficult for monetary policy to deal with

Reserve Bank of Australia Governor Michele Bullock highlighted in a recent statement that supply shocks pose a significant challenge for monetary policy. She emphasized the necessity of addressing second-round effects on inflation. As the entity responsible for setting interest rates and managing monetary policy in Australia, the RBA's primary objective is to maintain price stability, which is defined by an inflation rate of 2-3%.

The institution also strives to ensure the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. To achieve these goals, the RBA employs various tools, including raising or lowering interest rates, quantitative easing, and tightening. In recent times, inflation has been viewed differently than in the past, with moderate increases leading central banks to raise interest rates, which in turn attracts global investors seeking lucrative investment opportunities, thereby increasing demand for the local currency.