Interest rates — time to change course | Business Line

Interest rates — time to change course | Business Line


With reference to the observation "Hardly had the dust settled on the US Fed rate hike when there was a clamour that Indian interest rates should be lowered. With the progressive increase in the US Fed funds rate, it would be sheer harakiri to reduce RBI policy interest rates. The RBI should not remain accommodative. It should be made clear that we have reached the end of the interest rate reduction cycle.", though for Fed Reserve it was a 100 per cent rise in the base rate, the reactions from the markets world over were not commensurate with the noices before the Fed decision. Without belittling the significance of movement of Fed rates, one is tempted to point out that RBI has give weightage to domestic factors and as pointed out in the article, a longer pause may be necessary before further cut/s in base rate in India.

M G Warrier


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