There is increasing confusion among Central Bankers, Economists, Finance Ministers, Fund Managers and Investors on the current global liquidity environment. Central Banks from ECB to Bank of Japan are pumping in USD trillions into the economy but results are yet to show up both in terms of higher economic growth and higher inflation. Global capital flows are showing signs of fatigue and increasingly markets are reversing directional bets on all asset classes. To cap it all, negative interest rates and negative bond yields are distorting the picture further and causing consternation in the market on potential impact of reversals.
What could be the end result of the unprecedented infusion of Liquidity by Central Banks? What are the longer term effects of Fed Rate Hikes? How will global Liquidity affect India and how can RBI manage Liquidity to bring about policy transmission?