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By Raghuram Rajan
Published: July 28 2010 23:34 | Last updated: July 28 2010 23:34
Before the Senate banking committee last week, Ben Bernanke, the Federal Reserve chairman, hinted that, with fiscal policy reaching its limits and "unusual uncertainty" in financial markets, interest rates will need to remain ultra-low for the foreseeable future to boost America's flagging economy.
The case against rate rises seems obvious. Although worries about Japan-style deflation in the US are overblown, deflationary pressures are more worrisome than inflation. Moreover, under normal circumstances, monetary policy can boost growth in a range of ways.
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