Looking through supply-side inflation is a flawed approach: Viral Acharya

Financial market dominance over central banks is a huge problem and challenge, former RBI deputy governor Viral Acharya says

Since disruptions on the supply side translate into an actual rise in inflation prints and consequently influence household price expectations, it is flawed for central banks to look through this phenomenon, says former Reserve Bank of India deputy governor Viral Acharya. In an interview ahead of the three-day meeting of the Monetary Policy Committee (MPC), Acharya tells Bhaskar Dutta that even central banks are not able to separate out when you can say inflation is caused by a supply shock, which means households and workers would be able to do that to an even lesser extent. Edited excerpts:

Q. The