The impact of the US Federal Reserve's recent decision to cut the benchmark interest rate by 50 basis points to 4.75-5.00% will be minimal for India, as much of this move was already anticipated, according to India's Chief Economic Advisor, V. Anantha Nageswaran. Speaking at Deloitte’s Government Summit 2024, Nageswaran highlighted that while the cut is overall positive for emerging markets, including India, its effect will be muted since the market had largely priced it in.
The cut follows expectations of a smaller reduction and marks a shift after the Fed held rates at a two-decade high for 14 months. Economic Affairs Secretary Ajay Seth also noted that the move is unlikely to significantly impact foreign inflows into India, emphasizing that market behaviors in other economies should be considered as well.
Fed Chair Jerome Powell remarked that the US economy remains strong, and further cuts of 50 basis points are expected in 2024.
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