Second, we find that the financial position of the State is improving and hence, the government's borrowings for developmental purposes could be conducted by the Reserve Bank at relatively lower cost. Financial markets continue to show increasing confidence in the State, year after year, particularly all through the new millennium.
This highlights the uncertainty around the current environment, where spillovers from divergent policy between the two largest global players might imply that each could pull harder in opposite directions in order to achieve the desired effect in their respective economies. This implies that potentially the policy challenge will entail larger and more unpredictable spillovers into the global real economy.