Monetary Policy

Federal Reserve Chairman Kevin Warsh raised the markets’ expectations for a September rate hike. Not so fast, three Fed officials suggested this week.

Be it Amartya Sen’s tackle of Arrow’s impossibility theorem on social choice or India’s fuzzy-logic position on a macro trilemma in the face of a dollar in-surge, what cannot be done can also get minds whirring. It’s why all eyes are on RBI.

What the US Fed’s new chief had to say at the symposium reassured global markets, while the seven key principles he enunciated for monetary policy are relevant for central banks across the globe—even if his position on communication is contestable.

And markets like it

The country's major indicators of inflation are showing varied inclines as they measure different sets of prices. The Reserve Bank of India (RBI) must stay vigilant over signs of price pressures in a few items diffusing across the entire economy.

The US Fed and Bank of England are planning to reverse their asset pile-ups that came with crisis-time quantitative easing. They must not go overboard. That policy has its critics, but it did serve a useful purpose—and disorderly reversals could be dangerous.

Those keen on an easy money policy argue that price instability isn’t a problem in India. While their reasons may sound coherent, the case they make for lower rates of interest usually falls flat. Here's why.

By becoming market makers of last resort, policymakers are pumping up leverage and risk.