Nama : Yusmira Hayati

NIM : 044850388

1. Impact of Global Supply Chain Disruptions and Rising Energy Prices on Monetary
Policy The ongoing global supply chain disruptions and rising energy prices are
likely to impact the effectiveness of monetary policy in controlling inflation in
several ways: Limited Effectiveness of Interest Rate Adjustments: Central banks
typically use interest rate adjustments to control inflation. However, in the
current scenario, supply chain disruptions and energy price hikes may lead to
cost-push inflation, making it challenging for central banks to address these
supply-side shocks through traditional interest rate tools.
• Potential Economic Slowdown:
- Higher energy prices can lead to increased production costs, which may result in
reduced consumer spending and business investment. This could potentially
slow down economic growth, complicating the central bank’s efforts to manage
inflation without causing a significant economic downturn. Inflation
Expectations:
- Persistent supply chain disruptions and energy price increases can influence
inflation expectations among consumers and businesses. If these expectations
become entrenched, it may require more aggressive monetary policy actions to
bring them back under control.
- Additional Measures for Central Banks to Consider
- In addition to traditional monetary policy tools, central banks may need to
consider the following additional measures to address the impact of supply
chain disruptions and energy price hikes on inflation:
- Targeted Fiscal Policies: Collaboration with fiscal authorities to implement
targeted policies aimed at addressing specific supply chain bottlenecks and
supporting industries affected by energy price increases.
- Communication Strategies:
Clear communication from central banks regarding their assessment of the
inflationary pressures and their commitment to taking appropriate actions can
help manage inflation expectations and reduce uncertainty in the
markets.Supply-Side Interventions:
- Central banks may need to explore interventions aimed at addressing supply-
side constraints, such as facilitating trade facilitation measures and supporting
investments in infrastructure to improve supply chain resilience.
- Monitoring and Research:
Continuous monitoring of supply chain dynamics and energy markets, along with
conducting research to understand the specific drivers of inflation in the current
environment, can help central banks develop more targeted and effective policy
responses.
 2. Cryptocurrencies such as Bitcoin, which are decentralized and not controlled by
central banks, can reduce the effectiveness of monetary policy. Central banks
control inflation and price stability through setting interest rates and the money
supply. If people start using cryptocurrencies more than national currencies,
central banks’ control over monetary policy could be reduced because they
cannot regulate the supply and demand of cryptocurrencies.

Sources:

• Blinder, A. S., & Reis, R. (2005). Understanding the Greenspan standard. Brookings
Papers on Economic Activity, 2005(2), 47-96.

• Gopinath, G. (2021). The Great Lockdown: Worst Economic Downturn Since the Great
Depression. IMF Blog.