Impact of Fed rate hike on India will be very minimal, says CEA Arvind Subramanian

The rate hike by the US Federal Reserve is in line with global expectations and its impact on India will be "very minimal" due to our strong macro-economic conditions, Chief Economic Adviser Arvind Subramanian said on Thursday.

"This rate hike was widely anticipated, so I think markets should have priced this in and there should not be much of an impact of this per se (on markets)," he told reporters.

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"As far as India is concerned, we are really well cushioned. Inflation is coming down, fiscal deficit situation is very good, external situation is also robust. So, I think for all these reasons, impact on India would be very minimal," he added.

Subramanian further said that there should not be much volatility in the Indian market due to this global development.

US Federal Reserve had last night raised the interest rate by 0.25%.

"The impact (rate hike) will happen depending upon what it signals about the future rate hikes. I think that is still a little bit open. Lets wait," Subramanian said.

It was a reluctant rate hike on part of the Fed as there were voices in the US saying that the economy was not strong enough to take such a step, he added.