In recent times, many central banks across the world have redone their internal wiring as they abandoned traditional parsimony to tackle economic exigencies. The nervousness started showing after a nascent revival of economic growth collided with impaired capacities, resulting in incipient inflationary tendencies. With the US Federal Reserve recently indicating that it might start raising interest rates some time in 2023, the matrix of risks washing up on Indian shores suddenly looks much more complex and ominous. But three risks stand out in the report that impinge on systemic and financial stability, and need some attention. Protracted low interest rates have helped secure neither capital expansion nor economic growth, but aided indebted wholesale borrowers.

Source: Mint July 04, 2021 16:18 UTC