The Reserve Bank of India has just raised interest rates and shifted its monetary policy stance to calibrated tightening. But is the central bank confronting an inflation problem that conventional monetary policy is no longer equipped to handle?

For decades, central banks have distinguished between temporary supply shocks, which they could largely look through, and demand-driven inflation, which they could address through interest rates. But what happens when supply shocks are no longer temporary? When geopolitical conflicts, climate disruptions and restrictions on critical inputs become recurring features of the global economy?

And what happens when these disruptions push prices higher while simultaneously hurting production, investment and demand? Can raising interest rates solve that problem, or does it risk making matters worse?

In his latest column for BasisPoint Insight, Abheek Barua, former Chief Economist of HDFC Bank and now a faculty member at Ashoka University, argues that monetary policy may need an entirely new operating paradigm. 

Abheek joins BasisPoint Insight today to discuss these dilemmas and what they mean for the RBI's next moves.