Rate rises hit mortgage holders, first-home buyers and jobs, while doing nothing to fix many of the supply shocks driving prices higher. Governments need to carry more of the burden through taxation and responsible budgets.

I had an economics teacher who once joked that he set the same exam questions year after year. It was not a problem, he said, “Because I just change the answers.”

There is a lot of truth in that. The rise of behavioural economics in the 1990s, for example, put paid to the stupid presumption in economics that people behave rationally.

And in the 1990s, if you asked the question: “What can a central bank do to curb inflation?” The answer would have been: “Increase interest rates.” In the 2020s, however, when central banks have applied that formula, they leave themselves open to the charge of destroying the economy in order to save it from inflation.

A better answer might be for central banks to plead that they only have one weapon – interest rates – and that weapon might not be effective enough to deal with the political and economic difficulties ahead. However, if you only have one weapon, that is what you must use. It is a bit like a householder with only a frying pan to deal with a mice plague. Beating a few mice over the head with it is not going to stop the plague.

A better answer to the question might be to plead with governments to get their budgets in order so they are not pumping money into the economy and driving up demand and therefore prices, and also so that they are not adding to the demand for capital and therefore its price (interest).

Another part of the answer would be to question the relationship between interest rates and inflation and whether the cure is worse than the disease.

Fundamentally, a core task of government is to provide a stable currency. Without a stable currency, trust in the system breaks down. An extreme example was in 1920s Germany when........

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