Letters to the Editor: An alternative to interest rates to curb inflation

The current method of using high interest rates to combat inflation is described as a "blunt financial instrument." This approach, while intended to control rising prices, comes with significant drawbacks, including a lengthy implementation period and negative economic consequences.

According to the letter, it takes approximately 18 months to two years to effectively bring inflation under control using interest rate hikes. During this period, the economy suffers, with an estimated 50,000 people added to the unemployment list. Furthermore, businesses face increased operating costs, and individuals with mortgages experience higher repayment burdens.

The letter suggests that the primary beneficiaries of this policy are banks and individuals holding term deposits, who see increased returns. This contrasts sharply with the negative impacts felt by borrowers and the broader business community, highlighting a perceived inequity in the economic strategy.