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Fed rate hike to have ‘very minimal’ impact on India: CEA

business Updated: Dec 17, 2015 12:19 IST
Fed rate hike

The impact of the US interest rate hike should be “very minimal” in India as the macroeconomic conditions in the country are strong, chief economic adviser Arvind Subramanian said on Thursday.

“This rate hike was widely anticipated, so I think markets should have priced this in and there shouldn’t be much of an impact of this per se,” he told reporters.

“As far as India is concerned, we are really well cushioned. Inflation is coming down, fiscal deficit situation is very good, external situation is also robust. So, I think for all these reasons, impact on India would be very minimal,” he added.

Subramanian further said that there should not be much volatility in the Indian market due to this global development.

Indian stock markets opened in the green the morning after the US Federal Reserve hiked its key interest rate by 0.25% for the first time in about a decade.

The 30-scrip BSE Sensex was up 151 points or 0.6% in opening trade at 25,645.10 points and the wider NSE Nifty index gained 46.75 points or 0.6% at 7,797.65 points.

The rupee too appreciated by 13 paise at 66.60 against the US dollar in early trade on increased selling of the American currency by exporters.

“The impact (rate hike) will happen depending upon what it signals about the future rate hikes. I think that is still a little bit open. Lets wait,” Subramanian said.

It was a reluctant rate hike on part of the Fed as there were voices in the US saying that the economy was not strong enough to take such a step, he added.