Fixed Income And Currency Market

13 Oct 2020

CPI Inflation at 7.34%, Will Artificial Bond Yields Lead to Macro Economic Instability

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Inflation is much higher than RBI managed interest rates and this can lead to macro economic instability as real negative rates hurts private savings and also leads to currency depreciation that will cause outflows of capital. Low rates at times of rising inflation will lead to excessive debt in the economy as government and corporates get cheap money and this can lead to inflation trending higher.

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Arjun Parthasarathy
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