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Raghuram Rajan says world economy doing better after Fed cuts

Hopes of a trade deal between the US and China and a series of interest rate cuts by the Federal Reserve are making the world a much better place in the short term, former Reserve Bank of India Governor Raghuram Rajan said in an interview to Bloomberg TV.

“The Fed has been very sensitive to a lot of concerns about growth,” Rajan said to Bloomberg TV’s Haslinda Amin in Singapore. “It has done a series of insurance cuts. That seems to have reassured markets even while they were waiting to see some resolution to the trade imbroglio.”

The Fed last month cut interest rates for a third time this year, citing a combination of trade-policy uncertainty, slowing global growth and below-target inflation.

The US and China have been trying to negotiate a limited trade deal, but it may not be clinched until December over indecision on where to sign the deal.

In some sense “we are in a much better place” than where we were toward the end of last year, said Rajan. On Brexit, he said that an unprepared exit by the UK from the European Union will not be good.