Letter to BS: RBI should focus more on addressing liquidity concerns

There's possibly a case for calibrating rate response to the level of interest rates

Your editorial "Rate or stance" highlights an important issue that has been brought into focus by the Reserve Bank of India (RBI) Governor Shaktikanta Das’ (pictured) speech in the recently concluded fund-bank meeting in Washington. One possible way to calibrate the interest rate response is possibly to look at the level of neutral rate. If one assumes that the neutral rate in the United States is about 3 per cent, while the same in India being at least 6 per cent, a 25 basis point rate response will amount to about 8 per cent of the neutral rate in the