Tuesday, March 5, 2013

Why Subbarao can’t cut rates; only Chidambaram can

AFP

......To conclude, there is very little that the D Subbarao, RBI Governor, can do to push down interest rates. In fact interest rates are totally in the hands of the government. If the government can somehow control inflation, interest rates will start to come down automatically. For that to happen subsidies in particular and high government expenditure in general will have to be controlled. And that is not going to happen anytime soon.


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