As expected, the Federal Reserve raised US interest rates for the first time in four years on Wednesday, boosting them a quarter percentage point in the first of a likely series of increases in several steps this year and into 2005. This moves the benchmark federal funds rate to 1.25%.What it means for India: • Hike was expected, market volatility not likely to be severe • Becomes more profitable for investors especially with US money to invest in the US since they are not taking a currency risk • Money could start going back to the US, less of foreign capital—FIIs or NRI money—into India and emerging markets • Lower liquidity in markets here, pressure to hike interest rates • Lessens strain and cost of managing forex reserves which may dip
