Why are Central banks not raising interest rates despite rising oil prices?

Traditionally, higher inflation leads to interest rate hikes to slow demand. This approach was used after the pandemic, when prices surged across major economies. But this time, the situation is more complex. The conflict in West Asia has pushed up energy prices and while that is driving inflation higher, it is also straining household budgets. As people spend more on essentials like fuel and electricity, they tend to cut back elsewhere.This creates a difficult balancing act. Could raising interest rates now risk pushing economies into a slowdown or even a recession? Or does holding back risk letting inflation persist? And how much of this hesitation is driven by uncertainty around the evolving conflict and energy markets? In this episode, we unpack these questions and examine why central banks are holding back and how this phase of inflation is different. We also look at what it could mean for growth and policy choices going forward. Guest: Professor Rohit Azad, who teaches Economics at the Jawaharlal Nehru University Host: Devyanshi Bihani Learn more about your ad choices. Visit megaphone.fm/adchoices