CEA says rate hikes may not tame supply-led inflation
In short
Chief Economic Adviser V Anantha Nageswaran said supply shocks are likely to dominate the global economy. He said that makes rate hikes less effective, and that fiscal measures will need to do more.
What the reporting says
Chief Economic Adviser V Anantha Nageswaran said supply shocks will dominate the global economy and make monetary policy less effective, according to Business Standard. He said fiscal measures will have to play a bigger role as inflation is driven by supply-side pressures. The comments suggest rate hikes may not be enough to control prices if supply disruptions stay central.
Why it matters
V Anantha Nageswaran said supply shocks will dominate the global economy, reducing the effectiveness of monetary policy and increasing the role of fiscal measures. The comments are aimed at the inflation challenge and imply that rate hikes alone may not be enough when supply-side pressures drive prices. The remarks are relevant to policymakers and markets tracking inflation and policy response.