Sir what is he trying to convey by saying India paid price for its taper tantrum?
Pinned
TAPER TANTRUM Discussion | Decoded: Uday Kotak’s remark on Inflation & Interest Rates
Share
Please briefly explain why you feel this question should be reported.
Please briefly explain why you feel this answer should be reported.
Please briefly explain why you feel this user should be reported.
The taper tantrum incident happened after the 2008 financial crisis in which the USA government followed the policy of quantitative easing.
Somewhere around 2013, they started shifting or there were talks about having a break on the quantitative easing policy of the USA i.e raising the interest rates what happened then was the investor’s reaction to this..who had their money invested in the developing countries like India dropped their assets and moved their money to the safe heavens like the USA.
What our Indian government had to do was to curb the liquidity the government then bought these assets to make the money flow in the system again.
PFA Sanjay Sir’s take on the same:
15th dec Fed announced – they will stop asset purchase and QE and 3-4 rates hikes can be expected in 2022
On 26 Jan – Fed announced that they are going to start aggresive rate hikes
Next meeting was scheduled on 15/16th March but now they have preponed to 14th Feb (quoted as emergency meeting) to take action on policy rates ( This is Tantrums)