Taylor Rule shows Raghuram Rajan’s policy rate regime was prudent, not hawkish7 min read 11 Aug 2016, 02:31 PM IST
With the Taylor Rule policy rate now higher than the actual repo rate, the new Monetary Policy Committee has a job on its hands
A growing clamour for interest rate cuts has been one of the highlights of Raghuram Rajan’s tenure as Reserve Bank of India (RBI) governor. While his detractors accused him of stifling India’s economic growth by refusing to lower interest rates, Rajan himself has argued on more than one occasion that real interest rates (policy rate minus inflation) in India are much lower than in other major economies.
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