Former Indian central bank chief warns about rapid rate moves, could fuel ‘wealth shock’ that scares consumers – Raghuram Rajan, who led India’s Reserve Bank of India between 2013 and 2016, said this accommodative policy from many central banks had caused bubble-like conditions.
“Inflation had now become more than transitory.”
Former Indian Central Bank Governor Raghuram Rajan highlighted the tightrope that policymakers have to walk with monetary stimulus, warning that one false move may lead to a global “wealth shock” that could scare consumers.
With the cost of living surging ever higher in many regions around the world, central banks would typically dial back on their bond buying and push up rates to tame inflation.
“The longer they wait to normalize policy the more this sort of feeds on itself and there’s a belief that central banks aren’t going to move, rates will stay low for long,” Rajan said.
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