Mumbai, May 27 (Agency) The geopolitical conflict in Europe which started in February 2022 has imparted a strong shock that threatens to overwhelm the global economy and its constituents, Reserve Bank of India (RBI) has said in its annual report (2021-22) released on Friday. “Negative externalities are already rippling through financial and commodity markets, the international trade and financial systems, supply chains and the global geopolitical order,” the central bank said. The RBI noted that surging food and fuel prices, in particular, and shortages of essential items are impacting the disadvantaged adversely.
Assessing the macro economic scenario, the RBI said that persistence of high inflation is forcing countervailing monetary policy action at a time when supporting the economic recovery should have been assigned priority. It said that during 2022 so far (up to May 24, 2022), more than 40 central banks across AEs (advanced economies) and EMEs (emerging market economies) have raised policy interest rates and/or scaled back liquidity. “Policy trade-offs are becoming increasingly complex going forward and tail risks, including stagflation, loom large in several countries,” the central bank noted.