More Stories

Informist, Thursday, Sep 19, 2024

--Nageswaran: See muted impact of Fed rate cut on India 
--Nageswaran: US Fed rate cut positive for emerging economies 

--CONTEXT: Chief econ adviser Nageswaran at a Deloitte event 
 

NEW DELHI - The 50 basis points rate cut by the US Federal Open Market Committee is likely to have a muted impact on India, Chief Economic Adviser to the government V. Anantha Nageswaran said today, adding that much of the rate cut was already factored in by the financial markets.

"It will have different implications depending on how much of it is priced in. I think much of it was priced in. I think it is difficult to say it would give fillip to the global economy because other things wouldn't remain same," he said. "It is positive for emerging markets and for India, especially because stock market is already attracting lot of investor interest in last several years, but the impact on India would be muted, he said at an event organised by Deloitte.

Late Wednesday, the US Federal Open Market Committee voted to cut the federal funds rate target range by 50 bps to 4.75-5.00% against expectations of a cut half that size. The rate cut came after the US Federal Reserve had left interest rates at an over two-decade high for 14 months.

Commenting on Indian companies' sources of financing, Nageswaran said they have struck a fine balance in obtaining funding from the equity market and bank loans, which should be maintained.

The Fed's rate cut comes less than a month before the Reserve Bank of India's own interest rate decision, with the Monetary Policy Committee set to meet Oct 7-9. Most economists don't expect the Indian central bank to begin rate easing cycle next month. 

Nageswaran said growth will come from domestic demand rather than demand in advanced economies due to various geopolitical issues. India needs to continue to bring down logistics costs and expand capability centres in order to play a larger role in global value chain, he added. He also said that much of India's growth will come from tier-I and tier-II cities.  End

Reported by Sagar Sen

Edited by Vandana Hingorani

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.