The Hindu Business Line : Fed rate cut factored in: Chidambaram

New Delhi, Nov. 1 The Finance Minister, Mr P. Chidambaram, said on Thursday that it was “too early” to assess the impact of the US Fed’s quarter point rate cuton capital flows into the country, but indicated that this might give arbitrage opportunities for foreign companies.

“The reduction (cut in interest rate by the US Fed) was expected. I think the Reserve Bank of India had already factored that in while it announced the monetary policy (mid-term review),” Mr Chidambaram told reporters here.He also said it was “too early” to ascertain what impact the decision would have on the currency (rupee) and inflation here.

Spurred by the US Fed’s September rate cut, foreign institutional investors heavily bought into shares of Indian entities during October. The RBI had on October 30 left the policy rates unchanged in its mid-term review of the monetary policy for 2007-08.

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