Rahguram Rajan said, the global economy should be ready for the era of low inflation

Rahguram Rajan On Inflation: There is news of relief for the whole world including India. Former Reserve Bank of India Governor Raghuram Rajan said that the global economy may go back to the era of low inflation and central bankers following tight monetary policies will now have to keep this in mind.

Rajan, professor of finance at the University of Chicago Booth School of Business, said central banks should ask themselves how meaningful their policies were when inflation was moving from low to high levels. In a program organized by Bank of Thailand and Bank for International Settlement, Raghuram Rajan said that we should be ready to go into the era of low inflation rate.

Raghuram Rajan said, we need to check whether we didn’t recognize the inflation building or we were actually waiting for our tools to run and wanted to save them for next time. Rajan said it is important for central banks today to pursue policies that provide for changes in inflation dynamics over time, given deglobalisation, the slowdown in China and the K-shaped recovery in emerging economies.
Including adverse conditions can damage development.

However, Raghurajan Rajan said, in this period of volatility, central bankers of emerging economies have done a great job in anticipating the need to raise interest rates and have seen good results.

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