Standard Chartered’s Eric Robertson said central banks must recognize a shift to
structurally higher inflation, which reduces monetary-policy flexibility and
leaves less buffer against supply shocks. He warned that a weather event such as
El Niño would be minor with a 1% baseline inflation, but if countries are
struggling to keep inflation at about 3% or below, simultaneous oil and food
supply shocks would have amplified effects. That poses a policy dilemma because
rate rises cannot increase commodity supply or offset weather-driven supply
disruptions.
