Should we add disruptions of the oceanic atmosphere system to the long list of things that central bankers need to worry about?

In new research, Citigroup Inc. argues that El Nino, which is characterized by unusually warm ocean temperatures in the Equatorial Pacific, could have a big impact on the region’s monetary policy and economic growth.

According to Citi analysts Johanna Chua and Siddharth Mathur, countries in and around Asia could see severe impacts from this weather event.

Tying in the monetary policy factor, note that three indicators central banks often look at when determining monetary policy decisions are inflation, employment, and gross domestic product (GDP). In a number of Asian economies, agriculture is both a major source of jobs as well as a large weight in the consumer price index (CPI) basket. Indonesia, India and the Philippines are three countries that Citi highlights as particularly vulnerable to inflation given the percentage weighting that food has in their respective CPIs.

The economies of Vietnam and Indonesia are also largely dependent on the agricultural sector, with the industry making up more than 15% of GDP in both countries.

The sector also employs more than 30% of the total workforce in countries including the Philippines, India, China, Thailand.

The Citi analysts point out that although there doesn’t seem to be much of an inflationary impact from El Nino just yet, that doesn’t mean there won’t be.

All the Nino regions in the Pacific Ocean are now registering sea-surface temperatures (SST) well above the 0.5ºC threshold, with the most commonly cited Niño 3.4 at 1.3ºC above normal as of last week—the highest reading since late 2009. With the peak rainfall season in the major Asia agriculture growing regions beginning now, a prolonged dry spell has important implications on agricultural output, with a lag. The last two severe El Nino episodes (1997-98 and 1982-83) yielded significant crop damage and a surge in food prices, but other El Nino episodes were mild and last year’s warnings ended up being a false alarm, helping explain why prices of food staples haven’t reacted much as yet.

Meanwhile, the Food and Agriculture Organization (FAO), the United Nations body that seeks to ensure global food security, is warning that El Nino may last through the year and will probably hurt world grain production. Bloomberg