With the recent rate cut, hopes have gone up for the infrastructure firms as cost of funds will go down. However, amidst the cheer that rate cut has brought in the markets, there is downside that not many are warning about. First, is the premise itself that lower inflation and hence financial stability is here to stay. With food and fuel prices determining inflation levels, and both at the mercy of nature and global developments respectively, one cannot be so sure of the financial stability. Secondly, unless the supply side constraints are taken care of, a rate cut will not do much to boost the economy. Further, while rate cut is here, fiscal consolidation is yet to happen. With Government already reaching 99% of the fiscal deficit target in November 14, things do not seem very assuring in this regard.

After RBI, it is the Swiss National Bank (SNB) that has stunned the markets. By scrapping its three-year-old peg of 1.20 Swiss francs per euro and cutting benchmark interest rate to -0.75%, SNB has rattled the global stock and currency markets. Swiss Franc has moved up by 30% against the Euro. And Swiss stocks have witnessed their biggest daily fall in 26 years. The other global stock markets have not been untouched either.