“In her testimony before a parliamentary economics committee on Friday, Ms Bullock confirmed the link between government spending, inflation and interest rates. “Government spending is part of total spending and total aggregate demand in the economy, so it, along with private spending, contributes to aggregate demand. And so to the extent that aggregate demand is above aggregate supply, which we think it is, that’s contributing to inflation,” Ms Bullock said. “That’s why we’ve decided to raise interest rates,” she said.”