Impact of Federal Reserve meeting outcome

Entire World is waiting for the outcome of the two day meeting of Federal Reserve (FOMC) on Wednesday evening (17^th Sept ).

The expectation is that it will further taper the QE by 10~15 Billion and may increase or indicate interest rate increase sometime in future.

Any of these two actions will impact all emerging countries and India cannot escape this. Money will definitely flow out of India as the Fund movement among countries is mainly triggered by interest rate and liquidity condition . As the Indian Equity market is moving around all time high correction is already overdue and once any negative news comes it will definitely correct

However unlike last year in May 2013 impact on rupee when USA started QE tapering this time the impact is likely to be much lesser. There are certain key advantages which will help India as compared to other emerging Countries. Crude oil price is decreasing and has gone below US$ 100 recently. Current account deficit is much lower now as compared to last year due to the steps taken by Government and RBI in last 12 Months. India is having a strong government and all investors are looking towards positive development inside the country and external factor may not impact so much  

Actual Outcome of the meeting No hike in interest rate was announced . Interest rate will remain near zero level and may be changed end of 2015 FOMC decided to taper the QE program further, as expected, by reducing monthly asset purchases from USD25bn currently, to USD15bn beginning in October. If labour market conditions continue to improve, then the Committee will end its asset purchases at its next meeting on 29-30 October. The formal end of QE3 has, therefore, been announced.