On Thursday, Raghuram Rajan, the RBI governor, said in a television interview that "international monetary cooperation has broken down." He added that the developed countries "cannot wash their hands off and say 'we will do what we need to and you do the adjustment you need to.' "We will certainly do the adjustment we need to...but they may not like the kind of adjustments we are forced to do down the line," Rajan said.
The Dallas Federal Reserve Bank President Richard Fisher defended the U.S. central bank for charges from overseas that it was recklessly ignoring the impact of tapering on other countries. The Fed's moves have been one factor in a spike of turbulence in emerging markets. "Some believe we are the central bank of the world and should conduct policy accordingly. We are the central bank of America," Fisher said in a speech in Forth Worth, Texas.
Spoken like a person whose outlook does not even go beyond the lone star state. When you take the responsibility of being the currency of last resort, invite all to invest in your country and when your country is in trouble you keep printing money indiscriminately, then you have the duty to temper your decisions with an outlook of the world. You just cannot absolve yourself of any responsibility. If you do,then when we take decisions which is to safe guard our interest , you have no right to comment or preach over it.
The US economy is not as robust as it seems to show, the underlay is confusing and it can swing back the other way any time soon. Some more poor data is all that it needs. Right now what we are seeing is a mixed set of data which is coming out of the US. And the market is set for a big correction which will happen soon enough. Europe which has been weaker is already showing certain signs of fatigue.
It is not easy to dismiss Raghuram Rajan and the feds know that, they did that once and still paying for it.But then when you are dealing with a nation who always kept their interest over others we will get such reactions.