Raghuram Rajan warns of disturbance in global markets because of low interest rates

Raghuram Rajan, who ended his term as the RBI Governor on September 4th, has warned that low interest rates would be difficult to abandon, and could cause disturbances in global markets.

Countries around the world, including the US and Europe, are keeping interest rates low so that they can encourage growth, as per Rajan, this could lead to them being afraid of growth slowing down as and when the rates are raised rates.

He added that low interest rates should not be seen as substitutes for "other instruments of policy" and "various kinds of reforms" which an economy needs to grow.

It was in an interview with the New York Times that Rajan talked about his hopes of India finishing "the process of bank cleanup which is underway".

Talking of keeping inflation at check, he said that, "I think we've done exactly what was needed."

Post his RBI stint, Rajan will continue with his long-time job as a professor at the University of Chicago's business school.

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