Press Information Bureau

Government of India

Ministry of Finance

17-December-2015 19:14 IST

The US Federal Reserve raised the target range for the federal funds rate by 25 to 50 bps yesterday. Responding to the said decision of the Federal Reserve, the Finance Ministry states that this marks the beginning of gradual withdrawal of the accommodative monetary policy stand adopted since 2006. Going forward, the actions of the US Federal Reserve are expected to be cautious and data driven. The Ministry in a Statement here further stated that the Indian Stocks and Forex Markets have reacted well. Both the benchmark market indices actually rose in early trade today and continue to trade in the green. The rupee is stable in the 66-67/$ range. The Ministry further stated that this underlines the strong macroeconomic fundamentals of the Indian Economy and the efforts we have made to achieve macro stability over the last one and half years. The Ministry further stated that India is much better placed today in terms of real GDP growth, lower inflation, lower current account deficit and on-going fiscal consolidation. We hope to sustain economic reforms going forward into the future, it concluded.

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DSM

Monetary policy normalization prompts cautious global tightening while Indian markets show stability and resilience to the shift. The statement treats the US Federal Reserve's rate increase as the start of monetary policy normalization, notes cautious future Fed actions, and records positive reactions in Indian equity and forex markets-indices rising and the rupee stable-attributing market resilience to stronger GDP growth, lower inflation, a reduced current account deficit, and ongoing fiscal consolidation.