Standard Chartered: Central Banks Must Prepare for Structurally High Inflation

Standard Chartered's Eric Robertson noted that central banks need to recognize they are currently in a structurally high inflation environment. According to Jin10, this means monetary policymakers have less policy flexibility than before. "It also means we have less buffer room when dealing with certain forms of supply shocks," Robertson said. He gave an example: if the global economy is at a 1% inflation rate and a weather shock like El Niño occurs, people might consider it insignificant. However, if countries are struggling to keep inflation at 3% or below, and supply shocks in oil and food occur simultaneously, the combined effects of these shocks will become apparent. This poses a challenge for central banks, as raising interest rates cannot increase the supply of wheat, and central banks have no measures to alleviate supply shocks caused by weather factors.