Finance Minister P Chidambaram said on Thursday the interest rate cut by the US Federal Reserve was expected and already factored in by RBI in the quarterly review of the monetary policy on October 30.
The US Federal Reserve, on Wednesday, announced a 0.25 per cent cut in benchmark interest rate, which is expected to increase capital flow from foreign institutional investors in the Indian stock market.
"This cut in interest rate by the US Fed was expected, and I think the Reserve Bank of India has already factored that while it announced the monetary policy," Chidambaram
said while commenting on the decision taken by the US Fed Reserve.
Asked about the impact of the US Fed rate cut on capital flows into the equities market, the finance minister said: "It is too early to say anything on this issue."
The FIIs have pumped in more than $3 billion in Indian stocks after the US Fed reduced the discount rate -- the interest rate at which banks borrow from the US Central Bank -- by 0.5 per cent on September 18.
Chidambaram also said it was too early to assess the impact of the US Fed rate cut on inflation and rupee appreciation.
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