ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Budget 2023
  • Adani Saga
  • Markets
    • Stocks
    • Global Markets
    • IPO
    • Companies
    • Currency
    • Commodities
  • My Money
  • Calculators
    • Income Tax Calculator
    • Home Loan/EMI Calculator
    • Mutual Fund Returns Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • SIP calculator
    • Lumpsum Calculator
    • SWP Calculator
  • Videos
    • M Se Market
    • Jeb Zindagi Zaroorat
    • Light Camera Stocks
    • Tech Takes
    • Big Bulls Ka Nishana
    • Paisa Wasool
    • Commodity Ke MrityunjayMantra
    • The Right Property Show
  • Economy & Infra
    • Policy & Initiatives
    • Agriculture
    • Telecom
    • Aviation
    • Railways
    • Retail
    • Roadways
    • World Economy
  • Exclusive
    • Wealth Guide
    • Interviews
  • Auto
    • Cars
    • Bikes
    • Electric Vehicle
    • Commercial Vehicles
  • Tech
    • Mobiles
    • Gadgets
    • Reviews
    • Tips and Tricks
    • Apps
  • Real Estate
    • Home Buyers
    • Builders
  • Axis MF
  • Trending
    • Entertainment
    • Politics
    • Lifestyle
    • Travel
    • Sports
    • Viral
    • Education
    • Jobs
Read in App
Business News » India News

What happens to India as US Fed keeps rates unchanged?

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
What happens to India as US Fed keeps rates unchanged?
US Federal Reserve Chair Janet Yellen speaks during a news conference following the Fed’s two-day Federal Open Market Committee (FOMC) policy meeting in Washington, June 15, 2016. Image Source: Reuters/Kevin Lamarque/File Photo

The US Federal Reserve left interest rates unchanged on Wednesday but strongly signaled it could still tighten monetary policy by the end of this year as the labour market improved further.

The Fed said US economic activity had picked up and job gains were "solid" in recent months, Reuters reported. 

The latest move by the US central bank will now set the tone for stock markets worldwide including that of Indian markets in the coming months. 

The Bank of Japan (BoJ) in its monetary policy meet on Wednesday maintained a status quo and reassured the markets that it would continue to buy large amounts of bonds and riskier assets.The news from the Japan's central bank resulted in rise in shares of Indian stock markets on Wednesday.

"The case for an increase in the federal funds rate has strengthened," the news agency said citing the US central bank as saying in a statement following a two-day policy meeting.

It added that its rate-setting committee had decided against raising rates "for the time being," until there was more evidence of progress towards its employment and inflation objectives.

As projected by Care Ratings earlier on Wednesday, the US Federal Reserve followed Bank of Japan's (BoJ) latest monetary policy move to hold interest rates in its meeting.

The ratings agency in its report had said that if the US Federal Reserve decides to hold rates, it would put the US Fed on the same lines with the Bank of England (BoE) and the European Central Bank(ECB), where both kept interest rates at historic low levels in their recent meetings.

It had projected that the US central bank is more likely to maintain its status quo and will not go in for any interest rate hike this time as it may wait for some more time for the economy to recover. 

So, what will happen to India as the US Fed has kept interest rates unchanged?

According to Care Ratings, the US Federal Reserve's decision to hold interest rates in its Wednesday meeting will impact India's foreign institutional investor (FII) inflows, stock market, exchange rate and monetary policy. 

On the FII inflows, the ratings agency has said that US Fed's decision to hold rates will be positive for foreign institutional investors (FIIs) as the flows would continue in the normal course. 

"Higher interest rates will cause a reversal of such FII flows in the short run, though the Indian market is still attractive and would continue to receive equity inflows. Debt would more likely be affected as the tendency for lower rates in India and higher rates in the US could lower the spread which can cause a slowdown in inflows," said Care Ratings economists Madan Sabnavis, Anuja Shah and Anushka Sawarkar in a report. 

On the Indian stock markets, the three economists said that they expect the market to stabilise and remain less volatile.

As far as its impact on the country's exchange rate is concerned, Care Ratings economists have estimated the rupee to revert to normal and remain steady against the US dollar, consistent with steady FII inflows thus ironing out volatility in the market. 

"However, some volatility can be expected before all US Fed meetings as future rate hikes have been kept open-ended. Fundamentals like outflow of foreign currency non-residential (FCNR) bank deposits would tend to be the driving factor for us," they further added.

The US decision to hold rates will give some room for the Reserve Bank of India (RBI) to raise interest rates which is less likely to affect the country's foreign portfolio investor (FPI) inflows. 

"RBI is closely monitoring the US Fed movements given the possible effect on the exchange rate. Assuredly, the RBI will put more weight on domestic inflation and the FCNR outflows. However, no change in the rates by the US Fed would offer some space on interest rates to the extent that FPI flows would remain unaffected. Otherwise, this factor would also play at the back of the mind," said the three economists of Care Ratings in the report. 

When the US Fed will hike interest rates?

The US Federal Reserve chair Janet Yellen will hold two more monetary policy meetings this year, one on November 1 to 2 and the last one on December 13 to 14.

The central bank's November meeting is less likely to see any hike in interest rate as it will be held before the US elections, cited the Care Ratings economists.The bank is likely to raise interest rate in December this year, they added.

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
US Federal ReserveMarketsIndian marketsJanet YellenUS DollarRupeeBank of JapanBOJInterest RateReserve Bank of India
Written By: Tejal Yerunkar
Updated: Thu, Sep 22, 2016
12:15 am
Mumbai , ZeeBiz WebDesk
RELATED NEWS
US Jobs Data: America's hiring stays brisk as employers add 223,000 jobs in December as economy remains healthy US Jobs Data: America's hiring stays brisk as employers add 223,000 jobs in December as economy remains healthy
US indices decline after strong service-sector data feeds hawkish US Fed fears US indices decline after strong service-sector data feeds hawkish US Fed fears
FPIs turn net buyers in Nov; invest Rs 36,329 crore in equities FPIs turn net buyers in Nov; invest Rs 36,329 crore in equities
Foreign portfolio investors' turn net buyers; invest Rs 15,280 crore in equities in first week of November Foreign portfolio investors' turn net buyers; invest Rs 15,280 crore in equities in first week of November
Gold Price Today 19 September: Expert advises caution to traders ahead of US Fed meeting; recommends this on MCX Gold, Silver futures Gold Price Today 19 September: Expert advises caution to traders ahead of US Fed meeting; recommends this on MCX Gold, Silver futures

LATEST NEWS

Anil Singhvi strategy for February 8: Key market triggers, important levels to track in Nifty50, Nifty Bank today

Goldi Solar expansion plan: Green energy company to recruit 5,000 people by FY25

RBI Policy: Shaktikanta Das delivers 6th back-to-back rate hike; inflation, GDP projections tweaked

TSBIE Inter Hall Tickets 2023 to release soon on tsbie.cgg.gov.in - Check TS Inter 1st, 2nd Year timetable

Lucknow name change: BJP MP Sangam Lal Gupta demands to rename Uttar Pradesh capital

Once bearish on Paytm, Macquarie has a change of heart; stock rises for 3rd day

RBI projects economic growth at 6.4% for next financial year

Home, personal loan EMIs set to rise as RBI hikes repo rate for 6th in a row - Here's the math behind it

UK government offers counter-package to Tata Steel for Port Talbot plant

Should you buy, sell or hold Bharti Airtel shares after Q3 profit, ARPU miss analysts' estimates

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
© 2023. India Dot Com Private Limited. All Rights Reserved.
LIVE TV