Pursue Lose Monetary Policy at Home...

Article;
World-Bank Watchful as Fed Signals Tighter Policy

Comment;

If emerging markets fear tight monetary policy by the Fed, then, they should use loose monetary policy at home as is expected by the RBI... Why we are making it an issue? Can’t we help ourselves? In INDIA, especially, the real problem is inflation. Many argued, including Joseph Stiglitz, that we should use capital controls, when the Fed started QE, to avoid bubbles and inflation in the economy but we did not follow and now inflation is still a problem… Moreover CAD is a concern and all the capital inflows, in the past, could not make the Indian-Currency strong because of loose fiscal policy in the past. Fiscal policy in INDIA has crowded-out monetary policy from action and, now, when the RBI is not ready to come-down and we hear the government saying it will take charge of growth. Monetary policy is a signal how the fiscal policy should work and not the other way around, just how we did when the Great-Recession began. Both the monetary and fiscal policies aimed at improving growth during recession. Their target was and should be same. The government, too, should take low and stable inflation seriously…