Raghuram Rajan was recently elected as the governor of the
Reserve Bank of India, and what do you think his first move was? While you
might think Rajan, in his new role, would want to do something to win the
approval of as many people as possible, what he did actually had the opposite
effective, at least with certain business representatives. So, what did Rajan
do? Well, he raised the benchmark interest rate from 7.25% to 7.5%, causing
many people to be surprised and also causing many people to be quite angry.
So, what’s the deal with Rajan, you
may be wondering. Does he just need to fire his accountant or advisor? Quite
the contrary, Rajan knows exactly what he is doing. His reasoning for
increasing interest rates is that he desires to limit India’s ability to engage
in what he considers “unsustainable activities.” He meant, in other words, for
the increase to serve as a warning.
While
there’s a lot of debate over whether Rajan’s move was a smart one, one can’t
argue with the fact that it was definitely attention grabbing to say the least!
To find out more about Rajan’s financial beliefs and to see how they might
affect your life, contact an accountant with Susan S. Lewis in Naperville. #NapervilleAccountant
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