👉 Background: The all-powerful money experts at the Reserve Bank of Australia (RBA) sit down on the first Tuesday of every month to decide whether the cash rate should go up, go down, or stay the same.

👉 What happened: After a long stretch of low rates, the tide started to turn this May when inflation skyrocketed. The RBA's been increasing rates every month since - including yesterday, when it raised rates by 0.5% to 1.35%.

👉 What else: Some experts are starting to wonder whether these rate rises are actually effective in stopping inflation, or whether this is a case of too little too late.

What's the key learning?

💡There are two main factors that can affect inflation:

1. The demand for goods and services
2. The supply of those goods and services.

💡The theory is that by increasing interest rates, the demand for goods and services will decrease because the cost of life (and mortgages) goes up. But this doesn't address the supply side issue (think: the lettuce crisis). And this is a problem not even the almighty RBA can fix.

💡Only time will tell if the aggressive rate hikes will actually work. If not, we could end up seeing a tricky combination of economic instability, rising rates and inflation... Bottom line? We ain't out the 'unprecedented times' yet.

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