FED Policy and the World Economy

Federal Reserve Chairman has already spooked out Management policy to curb the injection of US$ [Dollars] into the economy by six months. This will also change the monetary policies of different countries. Apart from that, all the monetary systems will take time to settle too. First thing is that the asset purchases come to its end. Inflation in United States is considered to be normal at 1.05% and in the year end it can reach 2%. Due to this, there is the change to have a change in interest rate fixation by Federal Reserve. American investors world wide had started to withdraw funds from the world market and started accumulating in the United States market. With this policy, we can see the gaps in the stock markets world wide. Heavy losses will incur too.

Second option, is the unemployment rate of USA is to be seen. Fall in unemployment rate will trigger change in the above mentioned policies. It must reach between 6% - 6.5% from the current scenerio. But the exit policy will be at meagre pace. Central Banks must take individual decision according to the status quo of their economy. Nor indulge in partnering with G-7 economies. This mistake has been done by Chinese and Indian Economy. Better late than ever, redeem the policies suiting their countries, nor fall from the grace and take years to crop back. For Reserve Bank of India, we prefer Individual Monetary Policy for India and create growth. Agri-sector is required to be undertaken. Export redeemed and more to be done to get India on the heights.