This is the reason why monetary policy transmission is often dubbed as a “black box”.2 Hence, explaining monetary transmission is a constant challenge for every central bank. Let me now turn to the issue of transmission of monetary policy in India. In the last few years, there have been several empirical studies, examining the interest rate channel of monetary transmission.
Supply is even more inelastic because of the increasing cost of discovering and developing new fields, rigidity in refining and transport, and unresolved geopolitical difficulties. But this is not enough to explain the latest price surges.