Il Sole: Reactions to the expected Fed liquidity injection – ECB remains prudent, Australia and India increase the rates

03 November 2010

Two faces of the globalisation – interest rates that fluctuate between 0 and 1 per cent in some parts, and between 4.75 and 5.25 in other parts of the world.

Two faces of the globalisation – interest rates that fluctuate between 0 and 1 per cent in some parts, and between 4.75 and 5.25 in other parts of the world. The Australian central bank has surprised many by increasing its interest rates up to 4,75 per cent. “In the medium term, there is the risk of rising inflation,” explains Glenn Stevens, Australian CB governor. The Reserve Bank of India also raised its interest rates to 5,25 per cent.  

These moves are opposite to Bernanke’s efforts to revive American economy by injecting more dollars into the system that would trigger the Keynesian multiplication effects. ECB also continues on its way to abandon the expansive policies.