On one hand due to various international factors- the price of
Crude oil has gone down considerably-having a disinflationary effect on sectors
such as transport etc. But on the other hand, its been said that impact of a
federal interest rise is leading to investors pulling out money from the
Commodity markets - including Oil.
To my mind, impact of increased federal interest rates has a
negative effect on our domestic economy due to portfolio investors pulling out
hot money as we already saw during the infamous ""taper
tantrum"" which saw both depreciation of Indian rupee and inflation
consequently (importing Oil becoming expensive).
My question is concerning this conflict- whether rise in US
Federal interest rates as inflationary or disinflationary effect, within the
context of 2015 oil prices slide?"
When
US federal interest rate falls, there increases money (dollar) availability in
US market leading to inflation. This can be afforded when there is a force of
falling oil prices that decrease inflation. May be its an instrument to
stabilise the inflation, as per se the inflation has an effect on all the
interest rates in the market. Its better to have a steady inflation rather than
less inflation.
US
withdrawing money from India right now has no extra ordinary impact as we are
not so dependent on FDI. Hence we are able to absorb / buckle the global trend.
but sir, now there are lots of one
sector opened for FDI, at this time we cant expect much investment foreign ?
will this leads to withdrawal from other countries also ?
that
is a general 'tendency' not to invest when inflation is low and expected to
fall further.
one
does not want to buy an item for 5 rupees if one expects that its price will be
4 tomorrow(to crudely put it)
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