Will India relive history?

Perhaps events of the last week will turn out to be a watershed for financial markets for 2012. First, the minutes of the last meeting of the Federal Reserve Open Market Committee (FOMC) poured cold water on the assumption embedded in financial asset prices that there would be an endless supply of liquidity from central banks under some pretext or the other. Members of FOMC had expressed the view that additional monetary easing would be needed in the event that economic growth slipped noticeably or if the rate of consumer price inflation slowed below 2%. Both were reasonable preconditions.

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