Speaking at an event by Deloitte on Thursday, CEA said, “Difficult to assess the Fed rate cut’s precise impact on the world economy at this point but it’s a positive.”
He noted that much of the decision had already been factored into market expectations. “For India, Fed rate cut impact will be marginal,” CEA said.
The U.S. Federal Reserve has reduced its key interest rate by 50 basis points on Wednesday, following which had the Sensex surge over 700 points, and the Nifty index surpass the 25,500-mark, setting new record highs, driven by gains in banking and IT stocks.
Also Read: Fed cuts rates for first time since 2020: What happens to inflows and rates in India?
Meanwhile, Economic Affairs Secretary Ajay Seth believes the move from US will not greatly influence investment flows into India.”It’s a 50 bps cut from high level so I don’t see that making any significant impact on the flows (into India). We have to see how things develop going forward,” Seth told reporters.The Wednesday move lowers U.S. Federal Reserve’s benchmark lending rate to between 4.75 per cent and 5.00 per cent and is the first since the pandemic. The Fed also indicated that further cuts are planned before the end of the year, with more reductions expected in 2025.
Notably, India’s rate setting panel is also set to meet from October 7-9 and all focus will be on RBI’s MPC whether or not it will slash rates this time having maintained status quo since February 2023.