Building buffers and using them

Letting the rupee weaken may be the least bad option; raising interest rates to slow imports is too blunt an instrument

There is turmoil in the global economy. First Covid and then a war have curtailed global capacity, forcing prices up as buyers (some boosted by fiscal stimuli) compete for limited resources, until the weakest buyer drops out. While recovery from supply-chain bottlenecks was a procedural challenge, and one hopes the current disruptions in China do not last long, the drop in energy availability globally is difficult to offset quickly. A shortfall in affordable energy is almost certain to hurt global economic output. The current high inventory of goods due to a yearlong logjam in global shipping exacerbates the downward lash