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Fed cut favourable for Indian economy: Jalan

The overnight cut by the US Federal Reserve was a "favourable development" for the Indian economy, the head of the Reserve Bank of India said on Thursday, after presenting a monetary policy which left rates unchanged.

"This is a favourable development from our point of view," Reserve Bank of India governor Bimal Jalan told reporters when asked whether a cut in US rates is beneficial for the Indian economy.

"A benign interest rate environment abroad is better for us," he said.

In a surprise move, the Federal Reserve on Wednesday cut rates by a half point, sparking speculation among Indian bankers that the RBI could follow suit to maintain interest rate differentials between the two countries.

Earlier, unveiling the central bank's monetary policy for 2001/02 (April-March), Jalan said he wanted softer rates.

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