In well-functioning financial markets, changes in actual and expected targets for the federal funds rate are arbitraged through the financial system to affect the cost of credit and the price of assets.
Moreover, unlike developed economies, the SAARC economies also need to factor in the inter-linkages between growth and socio-economic outcomes. Even a small decline in growth may have magnitudinally wider repercussions as growth is critically linked with inter-regional equity and poverty. Hence the region needs to calibrate the time and magnitude of adjusting to the global new normal.