The Reserve Bank of Australia's repeated interest rate hikes this year have left many mortgage holders searching for alternatives to curb inflation. While higher rates do work by strengthening the Australian dollar, discouraging spending, and reducing asset prices, they are a blunt tool with delayed effects and potential risks of overcorrection.
Government spending cuts or tax increases could also reduce demand, but fiscal policy involves ethical considerations and lacks the precision of monetary policy. An independent body to adjust taxes has been suggested but remains untested globally.
Another idea is temporarily increasing superannuation contributions to divert funds from the economy, though this would require careful analysis of long-term impacts. Boosting supply-side capacity through infrastructure and worker upskilling could help, but these measures often come with short-term demand-boosting costs.
Despite these alternatives, most economists agree that managing the economic cycle should remain the Reserve Bank's responsibility, with fiscal policy focusing on long-term goals.