Prices and Interest Rate and Expectations...

The Fed’s job is to curb too much volatility in the either direction and keep the borrowing cost stable to stabilize demand and supply and prices and growth and expectations... But, not in the stock market, however, stable costs would help stocks... 

Higher price expectations further increases price expectations and lower price expectations lower price expectations, because when people expect higher prices they demand more in present which increase prices... 

Similarly, when people expect lower prices they again delay demand and lower prices, however lower prices increase demand... In this situation Monetary policy could further increase volatility through the borrowing cost...

Nevertheless, higher prices lower demand... Borrowing cost (here) refers to the neutral real interest rate at which the economy is at full employment...

Moreover, higher price expectations delay supply which also increases demand and price and expectations and lower price expectations would further increase supply and lower demand and price and expectations... 

Nonetheless, higher prices lower demand and increase supply which lowers price expectations, but higher price expectations increase demand and lower supply again increasing price expectations... 

Sameway, lower prices increase demand and lower supply (relatively) and increase price and expectations, but lower price expectations delay demand and increase supply which again lowers price expectations... 

The goal of economic policies is the curb too much higher or lower prices or inflation... 

Given the population growth rate of INDIA it needs to create 6-8 million jobs to absorb workforce and not 20 million or 2 Crore jobs after deducting natural rate of unemployment or full employment...

Monetary Policy increases the supply of money therefore it reduces interest rate whereas Fiscal Policy increases the demand for money for spending therefore it increases interest rate and expectations... 

The bond market reactions are different on expansionary monetary policy and fiscal policy... Higher money supply by monetary policy reduces bond yields, but higher fiscal deficit increases bond yields...

Fiscal Policy increases demand for money in the economy through taxes and debt which directly increases the demand for money and interest rate... fiscal deficit or debt increases demand through wage spending which also increases inflation and interest rate and expectations...

True RBI missed the oppourtunity to lower interest rates to boost growth after demonetisation which reduced inflation and inflation expectations too much even with an accommodative stance...

The RBI has set the benchmark rate to the repo rate, to increase rate cut transmission, which would be in effect from April 1, 2019 which is likely to reduce borrowing or lending interest rate across the board likely to increase demand for loans, consumption and investment spending, and growth and expectations.

Moreover, RBI is expected to further cut interest rate or the Repo Rate and/or adjust capital requirements since liquidity deficit might not let rate cut transmission materialize… 

The RBI might educate people about the real rates which matters and not the nominal interest rate INDIA has one of the higher real interest rate and capital requirement countries.

50% of our arable land is dependent on weather for irrigation amid water disputes among states... It is major risk for farmers' income... 

If farm prices can not be increased due to resultant inflation, costs must be brought down... 

Moreover, if prices of manufactured goes down that could also increase real wages in the farming..

The US still gives subsidies to farming... Moreover, Israel has expertise in more crop per drop which might be engaged to improve farm performance...