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A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Sunday, August 26, 2012

Impact of higher interest rates

This is the right time to listen more intensively from sufferers than theoreticians on the impact of higher interest rates. Sufferers (or, businesses), on average, talks on the same line: higher lending rates push up the cost of doing business.

News link on the issue.  

1 comment:

  1. I have read the news item in the Daily star. This situation is like a two edged razor for us. Combating inflation and simultaneously providing sufficient fund for the businesses at reasonable cost is really a challenge for us. I am afraid many might not agree with me, still I would say our businesses need to rethink their financing strategies and the central bank and government as well should think how to survive this trap. One comment from the news is that we are importing raw material from one of our competitor (china) still we want to be and remain competitive with them!! How come? We need to reevaluate our value chain , rethink our sourcing strategies as well. Well, I am a strong believer of support to private sector but to do so we need total revisit of our fiscal and monetary policy. Government is crowding out funds from the banking sector, cost of fund for the lenders are very high . In such situation the answer lies with the public sector policy makers.