Nageswaran further flagged that the emergence of artificial intelligence and immigration restrictions in different countries may slow down job creation in the services sector | Image: Bloomberg
Chief Economic Advisor V Anantha Nageswaran on Friday said monetary policy tools such as interest rate adjustments may become less effective in tackling inflation in a world increasingly vulnerable to supply-side disruptions.
"Fiscal and other public policy measures will be more important because raising interest rates will not solve the supply-induced problems. If anything, it may even be counter-productive," he said at the 9th Annual Food Systems Dialogue here.
Amid persistent supply induced issues, countries will have to use all kinds of flexibilities with regards to the inflation targeting framework, he said.
"Since 2022, very few countries have met their inflation target. So, it will be there as a framework, but I think countries will take creative liberties with it, as they have to," he added.