Energy shocks and inflation: challenges for monetary policy

Ryan Niladri Banerjee, Fiorella De Fiore, Marco Lombardi and Giovanni Lombardo

No 131, BIS Bulletins from Bank for International Settlements

Abstract: The recent energy shock ranks among the most significant since the 1990s.Structural factors and initial conditions influence how energy shocks propagate into inflation – directly and through second-round effects. The appropriate monetary policy reaction depends on the persistence of the inflationary pressures as well as the magnitude of the growth impact, and it differs across economies. Uncertainty about these effects further complicates the policy challenge.

Pages: 8 pages
Date: 2026-08-05
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