Editorial : Avoiding a slowdown: on Fed interest rates

Central banks are reversing the direction of their policies in a seemingly coordinated bid
Over the last few days, U.S. Federal Reserve Chairman Jerome Powell has been trying to allay(शांत करना/कम करना) fears that it will continue to raise(बढ़ाते ) interest(रुचि) rates notwithstanding conditions(परिस्थिति) in the economy. Many, including(समेत/सहित) President

Donald Trump, have been quite(काफी ) critical(आलोचनात्मक) of the Fed raising ratesdespite(के बावजूद/विरोध से) a slowing economy and inflation( मुद्रास्फीति ) staying well below its official target of 2%. In fact, many have argued(तर्क /) that the gradual(क्रमश/धीरे-धीरे) but persistent(निरंतर /सख़्त) raising of rates may be the reason behind the slowdown in U.S. growth and the lacklustre inflation numbers. The American economy created a mere 20,000 jobs in February, the slowest growth in jobs in well over a year, and GDP growth in the coming quarters is expected(उम्मीद ) to slow considerably(काफी/बड़े पैमाने पर) from the rate of 3.4% in the third quarter last year. On Sunday, however, Mr. Powell termed the current interest rate level as “appropriate(उचित /उपयुक्त) ”, and noted that the Fed does “not feel any hurry” to raise rates further. The Fed Chairman’s remarks come around the tenth anniversary of the historic(ऐतिहासिक) bull market in U.S. stocks, which began in March 2009 after policy rates were cut aggressively(उग्रता के साथ/झगड़ालू ढंग से) in order to fight the recession(मंदी/पीछे हटना). This marks a significant(महत्वपूर्ण/सार्थक) change from Mr. Powell’s hawkish policy stance since taking over last year.

But right now it is not just the Fed that has put the brakes on the normalisation(सामान्यकरण) of monetary policy(मौद्रिक नीति ) through a gradual tightening of short-term interest rates. As economic conditions in Europe and Asia begin to deteriorate(बिगड़ना /दूषित होना), central banks have been quick to turn more dovish(अधिक काम करना।). European Central Bank President Mario Draghi last week announced that rates in Europe will be kept low until next year and offered to lend cheaply to European banks. The People’s Bank of China has promised further monetary stimulus(उत्तेजना ) measures(उपाय कार्यवाही) to stem the fall in growth, and the Reserve Bank of India has started to cut interest rates as growth(विकास ) has slowed down each successive(लगातार ) quarter this fiscal ahead of the general election. It should thus be obvious(स्पष्ट ) by now that central banks around the world are reversing the direction of their policies in what seems to be a coordinated effort to avoid a global growth slowdown. The brakes applied to the raising of interest rates by the Fed allows other central banks to lower their own policy rates and boost(बढ़ावा देना) growth without the fear(डर ) that disruptive(विघटनकारी ) capital flows could wreak havoc on their economies. While such coordinated(समन्वित) monetary policy can certainly(निश्चित रूप) prevent(रोकें) slowdowns, it also raises the risk of extended(विस्तारित ) periods of low interest rates leading to more destructive (विनाशकारी )bubbles.