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Fed announcement to aid India to tackle inflation: IDBI MF

Fed may give some sort of guidance to the RBI when it plans to review the mid-term monetary policy today

September 20, 2013 10:19 IST | India Infoline News Service
The decision by the Federal Reserve to postpone the rollback of its stimulus measures was greeted by the markets worldwide in general and India in particular, V. Balasubramanian, Fund Manager-Equity and Gold, IDBI MF, said.

This move by Fed offers the policy makers in our country some more time to adjust and address domestic economic problems which were also accompanied by capital outflows. No doubt, the Fed may have to take the decision to scale down the bond buying programme sooner or later, but the dovish tone by the Fed provides the Government and the RBI some breathing space. This obviates the urgency to address all problems at one go. The announcement by Fed will help India to tackle the BoP crisis, inflation etc.

The equity market viewed these as a positive measure and this move by Fed may give some sort of guidance to the RBI when it plans to review the mid-term monetary policy today. There is a chance that RBI may reverse partly, the monetary tightening measures it took during the second week of July 2013 and afterwards to address the currency crisis.

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