Guarding against persistently low interest rates

Low interest rates should not become the new normal to save the financial system and address dismal economic growth. There's a need for a debate to address the growth issues by having more productive fiscal policies, better monetary policy transmission, and investment in infrastructure. The RBI, so far, has obliged with sharper cuts in key interest rates than expected in the last 18 months, which are likely to continue with the contraction of the economy in the current fiscal. In the last decade, the US and eurozone have kept interest rates at near zero level and infused surplus liquidity into the system, with no return to the growth and inflation staying below the targeted level. Watch as Anand Adhikari, Executive Editor, Business Today, explains.

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