Global inflation conundrum

RBI should continue the unwinding process

Higher inflation has complicated policy choices for most central banks, including in advanced economies. Central banks reduced interest rates and pumped liquidity into the system last year to deal with the disruption being caused by the Covid-19 pandemic. But the pace of economic recovery and pick-up in prices have surprised policymakers. Higher inflation, particularly in advanced economies, is being driven in part by pent-up demand, supply disruption, and higher commodity prices. Inflation rate in several advanced economies is running above the target of 2 per cent. The rate in the US in September was over 5 per cent, while it