US Fed decision provides more space to emerging mkts: Das

Status quo of the US Federal Reserve on interest rate will provide more space to emerging economies to deal with possible rate hike in the future, the Finance Ministry said today. "US Fed keeps rates unchanged. Emerging markets get more space. India better prepared to deal with Fed policy reversal when it comes," Economic Affairs Secretary Shaktikanta Das tweeted. An interest rate hike by the Fed is widely expected to lead to flight of capital putting pressure on forex reserves and the value of Indian currency. Yesterday, the Federal Reserve kept US interest rates at record lows in the face of persistent threats from a weak international economy and excessively low inflation.

The Fed offered little clarity on the likely timing of a rate hike. Some Fed officials have signalled a desire to raise rates before this year ends. But tepid economic reports have led many analysts to predict no hike until 2016.