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Bahasa inggris niaga

The intricate relationship between global supply chain disruptions, rising energy prices,
and inflation is currently a major concern for policymakers worldwide. This relationship
complicates the traditional monetary policy approaches employed by central banks to control
inflation. The current scenario warrants a closer examination of how these external factors
influence monetary policy's effectiveness and what additional measures might be necessary.

Firstly, global supply chain disruptions and energy price increases directly contribute to
cost-push inflation, as discussed earlier. This type of inflation occurs when the costs of
production inputs rise, leading manufacturers to pass these increased costs onto consumers in
the form of higher prices. This scenario is particularly challenging for monetary policy,
traditionally focused on demand-side management, such as manipulating interest rates to
control consumer spending and investment. However, when the inflationary pressures arise
from the supply side, conventional monetary tools such as adjusting interest rates might not be
as effective. For instance, even if a central bank raises interest rates to curb inflation, this action
does not resolve the underlying issues of increased production costs due to disrupted supply
chains or elevated energy prices.Given this limitation, central banks may need to consider a
more nuanced approach that includes measures beyond traditional monetary policy. One
potential strategy could involve closer coordination with fiscal policy. Governments could
implement targeted subsidies or tax relief on essential inputs to mitigate the impact of
increased costs on production. Additionally, investment in infrastructure and technology to
enhance supply chain resilience could also be crucial. These fiscal measures can help stabilize
costs and prevent these pressures from spiraling into broader economic sectors.

Moreover, central banks might also need to engage in more active communication
strategies to manage expectations. Inflation expectations can itself become a self-fulfilling
prophecy, where businesses and consumers expect continued inflation and raise prices or
wages preemptively. Clear communication from central banks regarding their strategies and
expected economic interventions can help manage these expectations, ensuring that
temporary supply-side shocks do not embed themselves into long-term inflation expectations.

In conclusion, while traditional monetary policy tools are essential for managing
inflation, their effectiveness in the face of global supply chain disruptions and rising energy
costs is limited. Central banks must adapt by integrating these tools with proactive fiscal
measures and strategic communication to effectively control inflation. This integrated approach
can provide a more robust defense against the inflationary pressures that today's unique
economic challenges present.
Reference source :
Mardiani. Siti Era, (2023). Bahasa inggris niaga. ADBI4201. Tanggerang Selatan: Universitas
Terbuka.