File photo: Chief Economic Advisor Arvind Subramanian
New Delhi: India will have to remain watchful about hiking of interest rate by the Federal Reserve which may happen later this year, Chief Economic Advisor Arvind Subramanian has said.
A hike in interest rates by the US, it is feared, could result in flight of capital from the emerging markets including India.
"Janet Yellen (Federal Reserve Chair) is saying there will be some rate hike sometime this year, but she expressed concerns over the labour market. What that means is the timing will be carefully done. That is something which we have to watch," Mr Subramanian told PTI.
Ms Yellen on Friday had said that the Federal Reserve will begin raising interest rates towards the end of 2015, but sounded cautious over the slack in job market.
The US central bank has kept benchmark federal funds rate at zero since the end of 2008 to help economic recovery.
Since early last year, the Federal Open Market Committee, the Fed's policy arm, had been expected to move on rates around mid-2015, but the decision is being delayed to push the economic growth further.
The Reserve Bank of India had earlier said that the country is prepared to deal with foreign fund outflows as the country has significant forex reserves.
India's foreign exchange reserves declined by a marginal $700 million for the week ended July 3, to $354.5 billion.
A hike in interest rates by the US, it is feared, could result in flight of capital from the emerging markets including India.
"Janet Yellen (Federal Reserve Chair) is saying there will be some rate hike sometime this year, but she expressed concerns over the labour market. What that means is the timing will be carefully done. That is something which we have to watch," Mr Subramanian told PTI.
Ms Yellen on Friday had said that the Federal Reserve will begin raising interest rates towards the end of 2015, but sounded cautious over the slack in job market.
The US central bank has kept benchmark federal funds rate at zero since the end of 2008 to help economic recovery.
Since early last year, the Federal Open Market Committee, the Fed's policy arm, had been expected to move on rates around mid-2015, but the decision is being delayed to push the economic growth further.
The Reserve Bank of India had earlier said that the country is prepared to deal with foreign fund outflows as the country has significant forex reserves.
India's foreign exchange reserves declined by a marginal $700 million for the week ended July 3, to $354.5 billion.
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