Suryaa Business Desk: Sudden disruptions in the international raw material supply chain significantly weaken the effectiveness of monetary policies followed by the domestic central bank, according to the Chief Economic Advisor (CEA). He stated that supply shocks are arising due to geopolitical tensions and adverse conditions in the transportation sector. He analyzed that even when interest rates are revised to control inflation, it takes more time to yield expected results due to these supply difficulties.
The Economic Advisor clarified that fluctuations in food and energy prices severely affect inflation expectations. He stated that price pressures coming from the supply side cannot be fully controlled solely through interest rate hikes. To address this, he suggested the need to simultaneously undertake appropriate economic and industrial measures alongside monetary policy to strengthen supply systems.
Reports emphasize that although the domestic economy is growing steadily, advance planning is crucial to face such challenges from the external world. It was noted that the government and the Reserve Bank are moving forward together with suitable strategies to ensure that the prices of essential commodities do not burden the common people. Financial experts opined that the domestic production sector should be further strengthened to withstand fluctuations in the international market.