Liquidity Trap in India: How Low Interest Rates Could Spell Disaster

A liquidity trap in India is becoming a concern as the Reserve Bank of India (RBI) maintains key interest rates at 6.50% amid rising inflation and stagnant economic growth. Despite efforts to manage liquidity through instruments such as the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF), high savings rates and cautious consumer behaviors are inhibiting economic stimulus, echoing challenges seen in other economies facing liquidity traps. ... Read More