The Joe Biden
administration in the US plans to spend $1.9 trillion to stimulate economic activity. Such a large fiscal programme would have perhaps lifted confidence in a pandemic-battered economy even until a few months ago. But things have changed quickly: Economic activity is picking up and the expected return of demand with the ongoing vaccination programme is fuelling inflation fears. The 10-year US government bond yields have increased to about 1.5 per cent, compared to a low of 0.5 per cent in August 2020. In this context, our lead editorial notes
that higher inflation and sustained increase in bond yields will have wider implications, not only for the US but also for emerging market countries like India.