The Hindu : Business : Fed rate cut on expected lines: FM

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Friday, Nov 02, 2007
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Fed rate cut on expected lines: FM

Staff Reporter

NEW DELHI: The Union Finance Minister P. Chidambaram on Thursday said the interest rate cut announced by the U.S. Federal Reserve on Wednesday was on expected lines and the Reserve Bank of India has already factored it in its mid-term review of the monetary policy announced a couple of days ago.

Briefing reporters after the Cabinet Committee on Economic Affairs (CCEA) meeting, Mr. Chidambaram said, “The U.S. Federal Reserve interest rate cut was expected. RBI has already factored this while announcing the monetary policy.”

He, however, declined to comment on its impact in the Indian economy. “What impact will it have on the capital inflows is too early to say. Similarly, it is too early to assess the impact of the rate cut on inflation and rupee appreciation,” he added.

On Wednesday, the U.S. Federal Reserve announced a cut of 25 basis points in benchmark interest rate to 4.5 per cent, which is expected to increase capital flows from the foreign institutional investors (FIIs) in the Indian stock market.

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