Do Interest Rates Actually Fix Inflation?

The RBA has lifted the cash rate to 3.85% (4 February 2026) — the first hike in over two years. 📈🇦🇺 But will higher interest rates actually bring inflation down… or will it just squeeze mortgage holders while prices keep rising? 💸🏠 In this episode of Talk Property To Me, hosts Brad East and Aaron Downie break down why they believe rate hikes won't fix Australia's biggest inflation drivers — especially supply-side inflation, electricity costs, government spending, and the impact of an ageing population spending more as rates rise. ⚡🧾👵 They also dive into the rental crisis, record-low vacancy rates, and why increasing mortgage costs can flow directly into higher rents. 🏡📉 ✅ What you'll learn in this episode: • Why the RBA hikes rates (and why it may not work) 📊 • Demand vs supply inflation (the key difference) 🧠 • Electricity prices + policy failures (21.5% YoY mentioned) ⚡ • Why mortgage holders get punished while others spend more 🏠 • Australia's ageing population effect on inflation 👵💰 • Migration vs new home builds: why rents keep rising 🏗️ • Vacancy rates collapsing (Orange: 0.5%) 😳 • Why higher rates can push rents up again 📈🏘️ • Modular/tiny homes at Bunnings: a new supply angle 🧰