Why Fed wanted to lower the interest rate?

Why the inflation all over the world was low? Also
critically comment on the article.

A)

- Covid had struck

- Inflation was at an all time low of 0.1%

- Business had no demand. Boost them.

- People had no money to spend. To boost spending. Disposable income.

- Increase money supply in market

- Boost the economy

Why the inflation in the developed countries have gone up so much?

- Restrictions were lifted post lockdown

- People were motivated to spend. Sudden spike in demand.
- Opening up of the economy.
- Lowering of interest rate by fed. Low cost of borrowing capital.
- Bonds were being purchased to infuse liquidity in economy.
- Money , stimulus cheques and subsidies were directly pushed into back accounts.

Why the inflation all over the world was low?

- During covid, people were not spending.

- Business were damaged.
- Increase in unemployment leading to decrease in purchasing power.
- US dollar is base currency for most transactions across nations. Increase or decrease in the
demand and supply of the USD affects all the currencies across the world.
- Rbi did not also change the interest rate which was unattractive. No indication of any change
was given to spur or control the demand.
- Hence, the Indian rupee demand also declined. COVID also majorly affected india curbing
demand here.
- Supply chain was disrupted all across the world leading to shortages of essential items like
semi conductor chips like automobiles.

CRITICAL ANALYSIS
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