 "Illustration: Ajay Mohanty")
Over the past several months, as interest-rate expectations have risen rapidly, we have worried about the risk of “accidents” — failures of firms, which can freeze financial markets.
Economic forces are mostly self-adjusting — a rise in interest rates to fight inflation can slow the economy, and once inflation is lower, rates can fall again. This is akin to us standing on a hill and planning to move to another hill: If all goes well, we can land at the same or better place. The challenge is in crossing the valley in between. As former Fed chairman Ben Bernanke
Economic forces are mostly self-adjusting — a rise in interest rates to fight inflation can slow the economy, and once inflation is lower, rates can fall again. This is akin to us standing on a hill and planning to move to another hill: If all goes well, we can land at the same or better place. The challenge is in crossing the valley in between. As former Fed chairman Ben Bernanke
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
