New Delhi, Dec 19: Union Finance Minister P. Chidambaram Thursday said the country is better prepared now to deal with the consequences of the situation arising out of the US Federal Reserve’s decision to slash US bond purchases and the markets have already factored in the impact arising out of such a decision.
“The government is of the view that the markets had already factored in the US Federal Reserve’s decision and, therefore, are not likely to be surprised by these moderate changes. Besides, we are better prepared than in May 2013 to deal with the consequences, if any, of the US Federal Reserve’s decisions,” he said in a statement issued here.
He said the government has taken note of the statement issued by the US Federal Reserve on the ‘taper’. “This morning, I spoke to Raghuram Rajan, Governor, RBI.”
The US Federal Reserve has announced that it will continue to purchase securities at the rate of $75 billion per month, as against the earlier level of $85 billion per month.
“This is a mild reduction, and the US Federal Reserve has not announced any sequential reduction,” Chidambaram said.
The minister said the US Federal Reserve will “continue its purchases of treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labour market has improved substantially in a context of price stability.”