Can Central Banks Rescue Us From High Interest Rates And Rising Debt?

Raghuram Rajan, former Reserve Bank of India governor, joins Steve Davis at the Jackson Hole Symposium to offer his take on Fed chairman Kevin Warsh’s speech and Treasury secretary Scott Bessent’s recent intervention in bond markets. Rajan explains why attempts to push down long-term yields can distort important market signals, and why rising debt-servicing costs could ultimately force policymakers to pay greater attention to addressing persistent government deficits.

Rajan and Davis address the long-term behavior of real interest rates, the risks of assuming unusually low real interest rates at a point in time will continue in the future, and the need for more fiscal prudence amid high levels of government debt. They also discuss the limits of central banks, which can address liquidity problems and market dysfunction but cannot rescue governments from an underlying fiscal crisis.

Recorded on August 28, 2026.

RELATED SOURCES

• “In Our Time,” keynote speech by Fed Chair Kevin Warsh at the Jackson Hole Economic Policy Symposium, 28 August 2026.
• Breaking the Mold: India’s Untraveled Path to Prosperity, Raghuram Rajan, 2024.