Finally, the monetary authorities are facing very complex challenges, since traditionally oil prices were treated as “shocks” and food prices are also treated as some sort of a “shock”. It is now realised by the monetary authorities, in advanced economies also, that food prices have significant impact on inflation-expectations, which are vital for the conduct of monetary policy.
In developing economies, the problem is more acute since the weight for food prices in price indices is large. Way forward, all of us recognise the growing importance of Asia in an inter-dependant world.