RBA’s Bullock: Supply-Side Shocks Hard for Monetary Policy to Handle

Bullock's framing matters because it concedes a boundary: when inflation is driven by production and supply disruptions rather than demand, rate settings can do little beyond containing second-round effects. That distinction shapes how central banks communicate in supply-driven episodes, since tightening into a supply shock risks output without fixing the underlying price pressure. No policy change was signalled here. The open question is whether this framing gains traction among other central banks facing similar supply-side constraints.