Policy framing must consider emerging nations: Rajan

Policy framing must consider emerging nations: Rajan

Asserting that India is well placed to weather financial crisis, RBI Governor Raghuram Rajan on Sunday said the central banks of developed nations must also keep in mind emerging nations while framing monetary policies.

"I don't think we can proceed forward saying everybody is in their own boat and they sink or swim alone," he said in reference to the need for advanced nations, like the US, to take heed of countries vulnerable to the stimulus withdrawal.

Talking to 'The Australian Financial Review', Rajan said while India was well placed to weather the upheaval, advanced nations must recognise the impact of their monetary policy decisions on other economies.

At the conclusion of their two-day meet, G20 said their finance ministers and central bank governors recognised that monetary policy needs to remain accommodative in many advanced economies and should normalise soon.

India and other emerging economies have been asking the US, which has started gradual withdrawal of its fiscal stimulus, to be more predictable in monetary policy. The US Federal tapering has caused flight of capital out of emerging economies and in turn hammering their currencies.

The Federal Reserve has reduced its monthly bond purchases by $20 billion to $65 billion on signs of an improving US economy.

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