Central Banks Lack Tools To Boost Inflation, Raghuram Rajan Says
“We are in a new world,” Rajan said. One that lacks the tools to boost inflation.
Central banks across the globe lack the tools to boost inflation, according to Raghuram Rajan. The former Reserve Bank of India Governor was speaking to Bloomberg at the Hoover Institute Conference in Stanford, California.
“We are in a new world,” he said adding, earlier the fight for central banks was against high inflation.
Unfortunately, we have the opposite problem now that inflation in many cases is a little too low. The central banks want to boost inflation but we don’t have the tools that allow us to do that in a reliable way.Raghuram Rajan, Former Governor, RBI
On China - The ‘Poster Child’ For Rising Debt
Commenting on China’s debt problems, Rajan said the Xi Jinping government needs to let the market forces fix the problems with time.
"The Chinese government can allocate the losses a lot more. It has some of that ability because a lot of the money flows through the public sector system," he said. "Eventually they want a market system to work, so they have to move away from this sense that they can fix the system when it gets into trouble."