बढ़ती कच्चे तेल की कीमतें केंद्रीय बैंकों के लिए नई महंगाई जोखिमों को उत्पन्न करती हैं

<p><span class="key-term" data-definition="Crude oil — unrefined petroleum used as a global energy commodity; price movements affect inflation and balance of payments (GS3: Economy)">Crude oil</span> has surged past <strong>$120 per barrel</strong> since the onset of the conflict in <span class="key-term" data-definition="West Asia — region encompassing the Middle East; geopolitical tensions here influence global oil supply (GS3: Economy)">West Asia</span>. The spike adds fresh pressure on <span class="key-term" data-definition="Central banks — monetary authorities that control money supply and interest rates to achieve price stability (GS3: Economy)">central banks</span> that have just emerged from a three‑year battle against the worst inflation in four decades.</p> <h3>Key Developments</h3> <ul> <li>Oil prices crossing the $120 mark raise the cost of transport, manufacturing and food, feeding into headline inflation.</li> <li>Since 2022, the <span class="key-term" data-definition="Federal Reserve (Fed) — U.S. central bank that sets monetary policy, including the federal funds rate (GS3: Economy)">Federal Reserve (Fed)</span>, the <span class="key-term" data-definition="Bank of England (BoE) — United Kingdom’s central bank responsible for monetary policy and financial stability (GS3: Economy)">Bank of England (BoE)</span> and the <span class="key-term" data-definition="Reserve Bank of India (RBI) — India’s central banking institution that formulates monetary policy, manages currency and liquidity (GS3: Economy)">Reserve Bank of India (RBI)</span> hiked their policy rates to curb inflation.</li> <li>By 2025, price growth had largely retreated toward targets, but the new oil shock could reverse that trend.</li> </ul> <h3>Important Facts</h3> <p>The rate hikes between 2022‑2023 lifted the <span class="key-term" data-definition="Repo rate — the rate at which a central bank lends short‑term funds to commercial banks; a tool to control liquidity (GS3: Economy)">repo rate</span> by several basis points in each jurisdiction. In India, the RBI’s repo rate rose to <strong>6.75%</strong>, while the Fed’s federal funds rate peaked at <strong>5.5%</strong>. These moves succeeded in bringing headline inflation down from double‑digit peaks to around <strong>4‑5%</strong> by early 2025.</p> <h3>UPSC Relevance</h3> <p>Understanding the link between commodity price shocks and monetary policy is essential for GS‑3 (Economy) questions on inflation dynamics, balance of payments and policy coordination. The episode illustrates how external supply‑side shocks can compel central banks to tighten policy even after a period of easing, testing the limits of monetary transmission mechanisms.</p> <h3>Way Forward</h3> <p>Policymakers may need to balance short‑term rate hikes with longer‑term supply‑side reforms, such as diversifying energy imports and boosting domestic refining capacity. Close monitoring of oil inventories, exchange rate movements and fiscal support to vulne