Fed rate cut likely to boost Indian economy: DEA secretary Ajay Seth

Economic Affaris secretary Ajay Seth

The US Federal Reserve's decision to cut key policy rates by an aggressive 50 basis points augurs well for the Indian economy, economic affairs secretary Ajay Seth has said.

Seth told Moneycontrol that the move was expected to have a favourable impact on global as well as the Indian economy.

The US central bank on September 19 cut interest rates in the 4.75 percent-5 percent range, with Federal Reserve chairman Jerome Powell saying it the country’s battle with high inflation was over. "We made a good strong start and I am very pleased that we did," Powell was quoted as saying by the Reuters.

When asked if the 50 basis points cut was too big, Seth said, No”, adding a reduction from high levels won’t cause a significant volatility in the market.

On Foreign Portfolio Investment (FPI) flows into India, Seth said he didn’t expect a major shift and the situation would not require close monitoring to ensure market stability.

The Fed rate action marks its first cut in over four years, signalling a potential easing in global financial conditions.

The Reserve Bank of India, which had held rates steady for over 18 months, meets in October for its bi-monthly policy review, which will be closely tracked to see if it follows the Fed lead.