While this is not an exact corollary, but interest rates, inflation and economic growth, too, follow a cyclical and reflexive behaviour. Low economic growth pushes the central bank to reduce interest rates and this cycle continues forever. Should this review result in lower interest rates, capital formation, which has slid from 35% in 2007 to 26% in 2017, may catapult to the mid-30s level. Will government and state finances improve if the old debt stack gets refinanced with lower interest rates? Maybe, there is a case to reduce interest rates by 200 to 300 basis points.

Source: Mint February 06, 2019 19:18 UTC