macroeconomic developments which underscore the need for enhanced policy coordination and dialogue among countries to achieve better outcomes. 29. the insurance against such inevitable global shocks ultimately is built on sound economic fundamentals, strong institutions and smart policies. price stability is key to maintaining macroeconomic and financial stability. in a broader sense, inflation is a measure of the trust and confidence that the public repose in the economic institutions of a country. while factors beyond our control may affect inflation in the short run, its trajectory over the medium - term is determined by monetary policy. therefore, monetary policy must take timely actions to anchor inflation and inflation expectations so as to place the economy on a strong and sustainable growth pedestal. we will continue to calibrate our policies with the overarching goal of preserving and fostering macroeconomic stability. in this endeavour, we will remain flexible in our approach while being cogent and transparent in our communication. if history is any guide, i am optimistic that our actions will usher in a new era of prosperity in the years ahead. thank you.

importantly, globalisation - led productivity gains contributed to a trend decline of inflation across countries. more and more countries, including emerging market economies ( emes ), strengthened their monetary policy frameworks with a number of them adopting inflation targeting. there was growing talk of globalisation leading to sustained disinflationary forces, technology diffusion and competition. we witnessed low and stable inflation in advanced economies ( aes ) and several emes beginning the 1990s and through the second decade of the new millennium. 5. with greater trade and financial integration, the domestic economies get more exposed to global shocks including volatile short - term capital flows. for instance, global shocks to food, energy and commodity prices affect inflation in every country. during the covid - 19 pandemic and now due to the war in europe, there are clear signs of transmission of global shocks to generalised and synchronised inflation across the world. 6. the recent upsurge in inflation due to the black swan event, i. e., the war in europe, on top of another such event, i. e., the covid - 19 pandemic offers a classic example of the globalised nature of current inflation. around 77 per cent of countries reported acceleration in inflation in 2021 and this proportion is expected to rise further to 90 per cent in 2022, according to the imf ’ s latest projections. moreover, for advanced economies, against an inflation target of 2 per cent, and emerging market economies, against an average target of about 3 - 5 per cent, two - thirds are witnessing inflation above 7 per cent 1. while global factors have always been an important driver of domestic inflation, what we have witnessed over the past three years is the more protracted and sizeable role of global factors in proportions not witnessed in decades. these factors have an even more conspicuous effect on net commodity importing countries like india. 7. with the origins of this inflation being essentially in the supply side, energy and food prices account for more than 50 per cent of the rise in prices. there are also increasing signs of sectoral price spillovers, given that the rise in global energy and commodity prices quickly translate into higher input price pressures. while in some advanced economies, pricing power of firms has increased significantly due to strong domestic demand since 2021, other advanced economies and emerging market economies have just started experiencing such pressures beginning 2022. household inflation expectations have started firming up, though they are based on current inflation data from