"Protectionism and populism tend to surface most when the pie stops growing" -- that's the word coming in from American economist Carmen Reinhart.

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Reinhart told CNBC-TV18 that part of the equity market story is tied to the exceptionally low interest rates.

"There is a search for yields. Some of the reasons that interest rates are low have to do with ageing population, some of them have to do with lower productivity and some of these trends to lower interest rates."

However, one has to be prepared to the extent that some of the interest rate decline is not permanent, that there could be adverse shocks, inflation surprises and the like that would lead to some increase in interest rates, he added.

"I think those equity markets will be sorely tested because right now I think there is a great deal of complacency that inflation is dead and rates are low forever and that in economics is always dangerous."

In an exclusive conversation with CNBC-TV18's Latha Venkatesh at India Risk Management Awards 2020, Reinhart also talked about the surge in global market despite rising government debt levels.

First Published:Feb 6, 2020 10:29 PM IST