A day after the US Federal Reserve decided to scale back its bond purchase programme, RBI Governor Raghuram Rajan today said the US should also think about the impact of its monetary policy on other economies.
“I have been saying that the US should worry about the effects of its policies on the rest of the world,” Rajan said while addressing an event here.
He said that every country should think of the far reaching consequence of their monetary policy.
“We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, rather than what is just right given the circumstances of their own country,” he said.
On Wednesday, the US Federal Reserve decided to cut its bond purchases further by another $10 billion. It has decided to purchase $65 billion per month of mortgage backed securities and longer—term treasury securities as against $75 billion per month earlier.
Following the announcement, financial markets across the globe witnessed volatility.
The Indian equity slumped over 200 points in early trade yesterday soon after the markets opened.
The rupee, too, lost its ground and weakened further today to close at 62.68 to a US dollar.