Inflation and interest rates in the US are still low, but that might changeBoth inflation and interest rates fell sharply in the US after the pandemic. Fast forward to 2023-2024...Just the fact that there might be a taper tantrum does not mean India will face a big macroeconomic crisis. After all, India’s foreign exchange reserves are significantly higher than what they were during the 2013 taper tantrum. When capital markets surge, investors experience a positive wealth shock, which has the potential to boost consumption. A macroeconomic disruption due to a taper tantrum could spoil these plans as loose fiscal/monetary policy might aggravate problems on the external front.

Source: Hindustan Times March 01, 2021 12:28 UTC