Raghuram Rajan expects US Fed to hike rate by 25 bps; India well-prepared for any eventuality

RBI governor Raghuram Rajan

RBI governor Raghuram Rajan on Friday said there is a 70-75 per cent probability of interest rate hike by US Federal Reserve in its policy meet to be held on December 15-16.

Rajan expects Fed to hike interest rates by 25 basis points (bps) next week and said the Fed decision will impact global financial flows.

Addressing a press conference in Kolkata post board meeting of the Reserve Bank of India (RBI), the governor added RBI is prepared for any eventuality that may follow after Fed rate hike.

Rajan assured that apex bank will keep the market supplied with needed liquidity and is ready to do open market bond purchase as far as long term liquidity is needed.

Speaking on banking reforms, the governor said that framework on restoring the banking sector health is due soon and that he is hopeful of restoring it by March 2017.