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RBI expects increase in rates by Fed, says they are ready for consequences
Posted on: 12/Dec/2015 3:38:50 PM
Raghuram Rajan, Governor of the Reserve Bank of India, has said that he expects the Federal Bank (US) to raise interest rates by up to 25 basis points from zero. He says that this will likely happen next week. Mr. Rajan also said that the RBI is ready to face any volatility that may arise from this.
Speaking to the press, Mr. Rajan said, Whatever decision the Fed takes, we are prepared for any eventuality. Market dynamics would take care of volatility but he underscored the need for strong and sustainable economic growth in the long run to beat any kind of sharp swing in reaction to global developments. The best defence against volatility is sound policy. There is a need for strong and sustainable economic growth. (As) on December 1 that India (is) in the midst of a recovery.
Other officials at the RBI say, A careful perusal would need to be made of the Fed`s language. Our expectation is that US Fed is almost certainly going to raise interest rates. It will be important to analyse the language Fed uses during the policy announcement. One can expect some changes in financial flows.
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