‘US interest rate cut will not affect foreign investment in India’- Economic Affairs Secretary Ajay Seth

New Delhi| The 0.50 per cent cut in interest rates by the Federal Reserve, the US central bank, will not have a significant impact on foreign investment in India. Economic Affairs Secretary Ajay Seth said on Thursday, the Federal Reserve has taken a good decision for the world’s largest economy. But, RBI will decide the cut keeping the Indian economy in mind. Seth said, the decision of the US Central Bank is positive for the global economy including India. We have to see where the level of US interest rates is? How other markets behave. The Federal Reserve cut interest rates by 0.50 percent late Wednesday after four years.

Seth said, the decision on interest rate cut in India will be taken by the Monetary Policy Committee (MPC) of RBI at the appropriate time. The MPC’s decision is based on what is good for the Indian economy. The three-day MPC meeting is to be held next month. The repo rate has not changed since February, 2023, and is stable at 6.5 percent.

India’s Chief Economic Advisor (CEA) V Ananth Nageswaran said the impact of the Federal Reserve’s move would be less on India as the policy rate was already very high. The Indian stock market is already attracting investors. Overall, the rate cut is positive for emerging markets. Returns in the market may reduce: According to PHDCCI President Sanjeev Aggarwal, the Federal Reserve’s decision may reduce the return on equity. Gold prices may increase and the rupee may strengthen. Some analysts believe that rates may also fall in emerging markets.

The price of Brent crude has fallen 1.1 percent to $74.46 a barrel after a rate cut in the U.S. According to analysts, prices are falling due to weak demand from China. Last week it fell below $70 a barrel. Brent crude could come as high as $60 in 2025, City said in a report. That means prices may decrease further from here.