Do interest rates matter in India?

Joseph Stiglitz and Larry Summers may not be on the same page on many matters these days. However, on the matter of asking the Federal Reserve not to raise interest rates, they both have sung from the same page. One could be excused for thinking that the Federal Reserve was about to push up the Federal Funds rate upwards of 200 basis points. It was supposed to raise the Federal Funds rate by 25 basis points after keeping it at around zero for the last six years. If they paused and reflected, Stiglitz and Summers would admit that their case would be inadmissible in the courts of common sense or prudent risk management. In the end, they prevailed. The Federal Reserve did not raise interest rates. That is a different matter for another occasion.

 

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