Warning against low interest rate, former RBI governor Raghuram Rajan has said such measures by central banks cannot substitute other policy instruments and broader reforms and expressed hope that his successor will finish the process of cleaning bank balance sheets. In an interview to the New York Times, Rajan hoped that the country will finish "the process of bank clean-up, which is under way." Rajan, who demitted the office yesterday as RBI Governor, cautioned that low interest rates globally could distort markets and will be difficult to abandon. Countries around the world, including the United States and Europe, have kept interest rates low as a way to encourage growth. "I think we've done exactly what was needed," Rajan said, adding that the central bank should continue to prioritise low inflation.

Source: dna September 05, 2016 17:15 UTC