Tuesday, August 24, 2010

"Low rates are not a free lunch, but people are acting as though they are"

IMF's Ex-Chief Economist Raghuram Rajan & Chair person on OERC of OECD Mr. White have expressed concerns about the Fed's decision to extend near zero Interest regime. Mr. Rajan feels that such lowered interest rate for prolonged period offers bad incentives for financial firms. It's nothing but prolonging pain by propping up housing market & keeping home prices from falling. So both these economists have suggested 2 % increase in benchmark rates of Fed.


Source- here