U.S.

Federal Rates and

its Impact on India

Subject:

Basic Economics
Submitted To:

Dr. Tilak Raj

Date of Submission:

9 October, 2019
Submitted By:

Japish Mehta

Sahil Jindal

U.S. Federal Rates and its Impact on India Page 1

Table of Contents

S. No. Topic Page No.

1 What Is the Federal Reserve System? 1
2 The Structure and Functions of the Federal Reserve System 3
3 What economic goals does the Federal Reserve seek to achieve 6
through its monetary policy?
4 The Federal Funds Rate: 6
5 Why the Fed Raises or Lowers Interest Rates: 7
6 How the Fed Funds Rate Works 8
7 How the Fed Now Sets the Fed Funds Rate: 9
8 All Fed Rate Changes From 2008 10
9 Impact of FED rates cut on US market 12
10 Why is the Fed meet such an important event for global markets? 15
11 Why does Fed policy matter for the rest of the world? 15
12 What difference does the health of the US economy make for the 16
rest of world?
13 What is the Fed's role in keeping the economy healthy? 16
14 Impact of fed rate changes on emerging markets like India 17
15 References 29

U.S. Federal Rates and its Impact on India Page 2

What Is the Federal Reserve System?

The Federal Reserve System is the central bank of the United States and arguably the most
powerful financial institution in the world. The Federal Reserve System was founded by the
U.S. Congress in 1913 to provide the nation with a safe, flexible, and stable monetary and
financial system.

The responsibilities of the Federal Reserve include influencing the supply of money and
credit; regulating and supervising financial institutions; serving as a banking and fiscal agent
for the United States government; and supplying payments services to the public through
depository institutions like banks, credit unions, and savings and loans. Payments services
include issuing, transferring and redeeming U.S. government securities, processing and
clearing checks, and transferring funds.

The Fed’s main income source is interest on a range of U.S. government securities it has
acquired through its operations. Other income sources include interest on foreign currency
investments, interest on loans to depository institutions, and fees for services (such as check
clearing and fund transfers) provided to these institutions. After paying expenses, the Fed
transfers the rest of its earnings to the U.S. Treasury.

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Figure 1: Federal Reserve System

FIGURE 2: Jerome Powell, Current Chairman of the Federal Reserve

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The Structure and Functions of the Federal Reserve System

The Federal Reserve System is the central bank of the United States. It was founded by
Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary
and financial system. Over the years, its role in banking and the economy has expanded.

The Federal Reserve has three primary functions: Monetary Policy, Banking Supervision
and Financial Services

Federal Open Market Committee

The Federal Open Market Committee, or FOMC, is the Fed's monetary policymaking body. It
is responsible for formulation of a policy designed to promote stable prices and economic
growth. Simply put, the FOMC manages the nation's money supply.

U.S. Federal Rates and its Impact on India Page 5

The voting members of the FOMC are the Board of Governors, the president of the Federal
Reserve Bank of New York and presidents of four other Reserve Banks, who serve on a
rotating basis. All Reserve Bank presidents participate in FOMC policy discussions. The
chairman of the Board of Governors chairs the FOMC.

The FOMC typically meets eight times a year in Washington, D.C. At each meeting, the
committee discusses the outlook for the U.S. economy and monetary policy options.
If there are signs of a weak economy like rising unemployment, stagnating job growth, or
increasing prices of everyday goods the Fed may decide to lower interest rates. Specifically,
the federal funds rate. Generally, when the federal funds rate is low, banks lower their
interest rates. This can help stimulate economic growth in a couple ways.

First, lower interest rates make it cheaper for people and businesses to borrow money for big
purchases or new ventures.

Second, cutting interest rates makes it less profitable to keep money in bank accounts.
Instead of saving, individuals and businesses may want to invest or spend that money. The
goal is to kick-start a virtuous cycle of spending and growth that creates jobs and steers
inflation to more healthy levels. However, it'll likely be some time after the Fed cuts rates
before consumers begin to feel this type of economic growth.

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BOARD OF GOVERNORS

The Board is an independent governmental agency that oversees the Federal Reserve System.

At the center of the Federal Reserve structure is the Board of Governors in Washington, D.C.
The seven-member Board and its staff constitute an independent government agency charged
with overseeing the Federal Reserve System. Board members are appointed by the President
and confirmed by the Senate, serving staggered 14-year terms that expire in every even-
numbered year. Board members are appointed for long terms in order to shield them from
political pressures. The President designates a chairman and vice chairman of the Board, each
of whom serve four-year terms. These appointments are subject to Senate approval and may
be renewed.

FEDERAL RESERVE BANKS

Twelve regional Federal Reserve Banks conduct much of the Federal Reserve System’s day-
to-day operations. The Fed includes 12 regional Federal Reserve Banks which carry out much
of the System’s day-to-day operations. The Reserve Banks, also known as district banks, are
nongovernmental organizations, set up similarly to private corporations, but operated in the
public interest. The districts are headquartered in Boston, New York, Philadelphia,
Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and
San Francisco. Reserve Bank branches are located in 24 other cities.

The Reserve Banks and each of their branches have a board of directors composed of
representatives of commercial banks that are members of the Federal Reserve System, as well
as individuals representing business interests of each District. Boards sometimes also include
members from the labour, consumer, and non-profit sectors. Each Bank president is
appointed by its board of directors and approved by the Board of Governors, which
safeguards against political influence.

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What economic goals does the Federal Reserve seek to achieve
through its monetary policy?

The Federal Reserve works to promote a strong U.S. economy. The Congress has directed the
Fed to conduct the nation's monetary policy to support three specific goals: maximum
sustainable employment, stable prices, and moderate long-term interest rates. These goals are
sometimes referred to as the Fed's "mandate."

Maximum sustainable employment is the highest level of employment that the economy can
sustain while maintaining a stable inflation rate.

Prices are considered stable when consumers and businesses don't have to worry about rising
or falling prices when making plans, or when borrowing or lending for long periods. When
prices are stable, long-term interest rates remain at moderate levels, so the goals of price
stability and moderate long-term interest rates go together.

The Fed seeks to achieve its monetary policy mandate by influencing interest rates and
general financial conditions. For example, by keeping policy interest rates low, the Fed
makes homes more affordable for consumers and makes it cheaper for businesses to invest,
expand, and hire. And by raising policy interest rates when inflation pressures are building,
the Fed helps to cool the economy and preserve price stability.

In short the goal of US FED is to keep the US economy healthy in two ways:

1: Minimising Unemployment

2: Stabilising Inflation.

The Federal Funds Rate:

The federal funds rate refers to the interest rate that banks charge other banks for lending
them money from their reserve balances on an overnight basis. By law, banks must maintain
a reserve equal to a certain percentage of their deposits in an account at a Federal Reserve

U.S. Federal Rates and its Impact on India Page 8

bank. Any money in their reserve that exceeds the required level is available for lending to
other banks that might have a shortfall.

Federal Funds Rate: 1980—Present

The Federal Reserve has raised the federal funds rate several times since 2015. As the economy cools, they are
considering keeping it at the current rate.

Why the Fed Raises or Lowers Interest Rates:

The Fed uses interest rates as a lever to grow the economy or put the brakes on it. If the
economy is slowing, the Fed can lower interest rates to make it cheaper for businesses to
borrow money, invest, and create jobs. Lower interest rates also tend to make consumers
more eager to borrow and spend, which helps spur the economy.

On the other hand, if the economy is growing too fast and inflation is heating up, the Fed
may raise interest rates to curtail spending and borrowing.

In December 2008, the Fed cut the fed funds rate to 0.25%. That’s effectively nothing. It did
so amid the worst financial crisis since the Great Depression, in an effort to light a spark
under the economy. The rate stayed unchanged until 2015, and rose steadily through 2018 as
the economy picked up steam. The 2019 cuts are a sign that growth is beginning to slow.

U.S. Federal Rates and its Impact on India Page 9

How the Fed Funds Rate Works:

The FOMC targets a specific level for the fed funds rate, which determines the interest rates
banks actually charge one another for overnight loans. Banks use these loans to help them
meet cash reserve requirements: Banks that are short borrow from banks that have excess.

A reserve requirement is the amount of cash a bank must keep overnight. It’s set by the Fed
and is a percentage of the bank’s deposits. The current top reserve requirement is 10% for
banks with more than $124.2 million on deposit.

Prior to the financial crisis, the Fed controlled the fed funds rate by buying and selling U.S.
government securities on the open market. When the Fed buys a security, that increases the
reserves of the bank associated with the sale, which makes the bank more likely to lend. To
attract borrowers, the bank lowers interest rates, including the rate it charges other banks.

When the Fed sells a security, the opposite happens. Bank reserves fall, making the bank
more likely to borrow, causing the fed funds rate to rise. These shifts in the fed funds rate
ripple through the rest of the credit markets, influencing other short-term interest rates such
as savings, bank loans, credit card interest rates, and adjustable-rate mortgages.

Actions the Fed took during the financial crisis and throughout the recession that followed
had the effect of ballooning banks’ reserve balances, and as a result, banks didn’t need to
borrow from one another to meet reserve requirements. The Federal Reserve could no longer
rely on reserve balance manipulation to control interest rates. Because of that, the Fed has
developed other tools to affect the rate.

U.S. Federal Rates and its Impact on India Page 10

How the Fed Now Sets the Fed Funds Rate:

The Fed sets a target range for the fed funds rate. It started back in October 2008, when the
Fed began paying interest on reserves (IOR), but to a limited number of institutions. This was
intended as the floor on the fed funds rate. After all, banks won’t lend to each other at a
lower rate than what they’re getting from the Fed.

But eventually, the Fed realized the IOR wasn’t sufficient. It needed a sub-floor, so in 2013 it
added another tool to help it control the target rate: the overnight reverse repurchase
agreement facility (ON RRP, or “reverse repo”). This program is available to a broader range
of financial institutions than IOR.

With the ON RPP, the Fed agrees to sell a security and buy it back at a higher price, which is
effectively the interest rate. This rate is set high enough to attract buyers, but below IOR.
When banks need to borrow from one another, they do so within the range bounded by IOR
and ON RPP. And when the Fed acts to raise or lower interest rates, it adjusts both IOR and
ON RPP.

U.S. Federal Rates and its Impact on India Page 11

ALL US FED RATE CHANGES FROM 2008

2019
Date Increase Decrease Level (%)

September 19 0 25 1.75-2.00

August 1 0 25 2.00-2.25

2018
Date Increase Decrease Level (%)

December 20 25 0 2.25-2.50

September 27 25 0 2.00-2.25

June 14 25 0 1.75-2.00

March 22 25 0 1.50-1.75

2017
Date Increase Decrease Level (%)

December 14 25 0 1.25-1.50

June 15 25 0 1.00-1.25

March 16 25 0 0.75-1.00

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2016
Date Increase Decrease Level (%)

December 15 25 0 0.50-0.75

2015
Date Increase Decrease Level (%)

December 17 25 0 0.25-0.50

2008

Date Increase Decrease Level (%)

December 16 ... 75-100 0-0.25

October 29 ... 50 1.00

October 8 ... 50 1.50

April 30 ... 25 2.00

March 18 ... 75 2.25

January 30 ... 50 3.00

January 22 ... 75 3.50

U.S. Federal Rates and its Impact on India Page 13

Impact of FED rates cut on US market:

Stock Market:

Though the economy responds slowly, you may see changes in the stock and bond markets
immediately. For major stock indices, rate cuts are typically good news. While expectations
are often priced in, sometimes there's a surprise that can cause the market to spike. In fact,
sometimes just rumours of cuts can cause a rally. For example, in June 2019, Fed chairman
Jay Powell assured that the Fed would act as appropriate to sustain the expansion, many
investors interpreted this as a hint that interest rates could be cut. As a result, stocks soared
and the Dow broke its six-week losing streak ( as shown in figure).

General, the S&P; 500 Index has generally performed well following interest rate cuts. This
may be partially due to economic recovery but could also be due to investors' increased
optimism.

U.S. Federal Rates and its Impact on India Page 14

Bond Market:

Interest rate cuts can also have a major impact on the bond market, driving demand for bonds
higher. This is because if interest rates are going to be lower, older bonds with higher interest
rates become more valuable. For investors who already own bonds, interest rate cuts can
potentially allow them to sell their bonds for a higher price on the secondary market.

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Asset Classes:
Over the past 46 years, the performance of stocks, commodities, REITs, and gold was
relatively balanced. But during low interest rate environments, REITs and U.S. stocks have
been the highest overall performing asset classes. Because interest rates are typically cut
during economic slowdowns, defensive stock sectors may be better poised to weather low
interest rate environments. Think of it this way, reduced rates in bonds may cause investors to
look for income streams elsewhere. This can cause increased demand for stocks that are
known for their steady dividends, like real estate, utilities, and telecom. Consumer staples
may also be a good investment during a rough economy because people will always need
food. Plus, these stocks tend to pay dividends as well. But remember the point of cutting
interest rates is to nudge the economy in the opposite direction. Though cuts may be the
result of a negative economic outlook, forward-thinking investors may want to anticipate how
interest rate cuts may help spur long-term economic growth.

Figure: Performance in Regular Rate environment

U.S. Federal Rates and its Impact on India Page 16

Figure: Performance during lower rates Environment.

Why is the Fed meet such an important event for global markets?

The Fed's actions have the potential to stir world markets. With the US being the world's
biggest economy and the dollar being the world's reserve currency, any action by the
country's central bank to influence the money supply has repercussions on the global
financial markets.

Why does Fed policy matter for the rest of the world?

There are two general reasons. One is that the US economy's performance is important for the
rest of us. If the Fed gets it wrong the US could end up underperforming, which would be bad
news for many other countries.

The second point is that Fed policy can have an impact through financial markets by affecting
currency exchange rates, interest rates and international flows of investment money.

U.S. Federal Rates and its Impact on India Page 17

What difference does the health of the US economy make for the
rest of world?

For most countries on the planet, the US is an important export market - for many, the largest
of all. If the US has a recession, it will buy less stuff from abroad than it would have if
growth had been maintained. Its immediate neighbours, Canada and Mexico, are particularly
exposed. For both, more than three-quarters of their exports go to the US.

The UK is also at some risk from economic storms in the US, although not to the extent of
Canada and Mexico. The US is the largest single country export destination for the UK,
though the UK exports much more to the countries of the EU taken together. The US
accounts for about 13% of UK exports.

What is the Fed's role in keeping the economy healthy?

The Federal Reserve has a mandate from the US Congress to promote maximum
employment and stable prices.

It raises interest rates if inflation is too high, or it thinks it is heading that way. It cuts rates if
it thinks there is a danger of economic growth slowing too much or inflation being too low.

Rate cuts make it more attractive for business to borrow to invest and households to borrow
to spend. The Fed is perhaps the key player in trying to prevent a recession and promoting a
recovery if there is a downturn.

The Fed has started reducing interest rates in an attempt to maintain solid economic growth in
the US.

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Impact of fed rate changes on emerging markets like India

Policy decisions taken by the Federal Reserve impact both the US and global financial
markets. US Fed Chairman Jerome Powell conceded that this policy action may put the
emerging markets under pressure but added that any impact could be offset by healthy US
growth.

 Impact on Corporate Defaults

Many emerging market companies have benefited from low U.S. interest rates by borrowing
in dollars and repaying debt with stronger local currencies.

According to the Bank for International Settlements, there was $1.1 trillion in dollar-
denominated bonds issued by non-bank emerging market companies outstanding in Q3 2015
compared to just $509 billion at the end of 2008—a significant increase during a period of
low-interest rates.

Higher U.S. interest rates could make these debts more difficult to service. For
example, Brazil’s currency fell to record lows against the dollar in 2015, which made it
difficult for companies generating revenue to repay debt in U.S. dollars.

These increased costs could lead to a wave of corporate defaults that could hurt the emerging
market corporate bond market and ETFs like the iShares Emerging Markets Corporate Bond
ETF (CEMB).

 Impact on Foreign Investment

Many emerging markets have seen significant foreign direct investment since the 2008 global
financial crisis. With U.S. and European bond yields at record lows, investors flocked into
higher yielding emerging market stocks and bonds to bolster their portfolios yields.

These emerging market economies became reliant on this steady increase in foreign
investment to drive economic growth and witnessed significant expansion over the past
several years.

U.S. Federal Rates and its Impact on India Page 19

Higher interest rates could draw more investors back to the U.S. and spark an outflow of
capital from emerging markets. This lower foreign investment could put the brakes on
economic growth in many economies that rely on such investments.

The so-called Fragile Five economies have been deemed the most vulnerable to this kind of
downturn—Turkey, Brazil, India, South Africa, and Indonesia—and warrant particularly
close attention.

Further, countries that are excessively reliant on foreign investments to drive growth suffer
the most during a currency fall. This phenomenon played out during the Asian financial
crisis of the 1990s, when several countries in south-east Asia saw a rapid fall in their
currencies and outflow of foreign capital.

2017

Date Increase Decrease Level (%)

December 14 25 0 1.25-1.50

June 15 25 0 1.00-1.25

March 16 25 0 0.75-1.00

Fig : Table showing Federal Reserve increased rates 3 times in 2017 by 25bps each.

U.S. Federal Rates and its Impact on India Page 20

Fig: It is clearly illustrated due to increase in Fed rates in 2017, Foreign institutional investors
withdrew funds from India to invest in the US as it offered better interest rates then.

 Impact on Currency Values

A hike in Fed rates will drive up the dollar's value against emerging market currencies. A
falling currency has many ramifications: imports become costlier, which increases deficits
and drives up inflation.The dynamics could make it more difficult for countries like South
Africa, India to repay their dollar-denominated debts—the same issue faced by many private
companies. The only solution may be to let its currency fall in value, which could help
exports but hurt investment.

 Impact on Sovereign Rating

Many emerging market governments took advantage of low U.S. interest rates to borrow in
U.S. dollars. For example, South Africa borrowed heavily when the dollar was low and used
the proceeds to help finance its growth and budgetary needs.

These dynamics helped many emerging markets outperform over the past several years, but
the strategy could come back to haunt them when the dollar rises in value and these debts
become more expensive.

U.S. Federal Rates and its Impact on India Page 21

South Africa has one of the largest external financing requirements in the world, which
means that its currency reserves are smaller than the amount needed to service its foreign
debt and pay for imports.

These dynamics could lead to a lower credit rating and higher borrowing cost moving
forward if the U.S. dollar appreciates in value. A higher bor--rowing cost could make it more
difficult to obtain the funding needed to invest in growth.

 Impact on Dollar Commodities

Many emerging market economies are reliant on commodities to drive their economic
growth. For instance, Brazil and Russia depend heavily on crude oil and natural gas prices,
while Chile and Peru rely extensively on copper and other hard commodities.

Commodity prices have risen over the past several years since they are priced in U.S. dollars
and more dollars were required to purchase the same "value" of commodities, putting a
higher dollar value on them.

If the dollar rises in value, these dynamics could reverse and commodities could see further
downward pressure.

This is bad news for emerging markets because most commodities are sold in U.S. dollars,
which means that they will generate less revenue in real terms. Less revenue could translate
to slower growth and lower valuations for commodity-focused companies operating in these
key emerging market economies.

 Government borrowing

Emerging economies try to take advantage of low-interest rates and borrow in US dollars.
These proceeds help them boost growth.

However, during an era of tightening monetary policy in the US, emerging market currencies
could come in under pressure, leading to higher borrowing costs for countries excessively
reliant on foreign debt.

U.S. Federal Rates and its Impact on India Page 22

  Repaying corporate debt

When the US interest rates were low, many companies of the emerging countries benefitted
as they borrowed in dollars and repaid the debt in their stronger local currencies. If the rates
go up, they find it difficult to generate revenue to repay this debt.

Between 2008 and 2015, the outstanding dollar-denominated debt issued by non-bank
emerging market companies rose from USD 509 billion to USD 1.1 trillion.

During a period of dollar strength, any debt that is unhedged becomes more expensive to
service.

 Impact on financial stability

The Asian Development Bank said in its Outlook Update that an increase in rates implies a
stronger dollar, which would drain capital from Asia.

Rising rates in the US would force emerging economies to increase their own rates, in order
to protect their currencies, which would threaten financial stability.

"The region would face higher financing costs for investment and higher effective discount
rates, which would lower asset valuations and weaken the region’s corporate balance sheets.”

In his maiden policy meeting, the US Fed Reserve Chairman Jerome Powell announced a
hike of 25 basis points to the US benchmark interest rates, bringing it to a range of 1.5 to
1.75 per cent. This is the fourth hike within a year. The Fed hasn't hiked rates four times in a
year since 2006. The reason for this widely expected rate hike is historically low
unemployment rate in the US and the confidence in the growth of the US economy, which is
picking up strongly.

Moreover, the commentary of US Fed remained on expected line and we can expect three
more hikes in the current year. Now let us discuss how this rate hike and commentary is
going to impact India?

 Interest rate

U.S. Federal Rates and its Impact on India Page 23

With the rise in key policy rates in the US, India cannot afford to lower its key policy rates,
despite, inflation easing as indicated in the latest data. Any rate cut in India could trigger
dollar outflow, which will ultimately weaken the Indian rupee. Hence, rate cut cycle in India
will pause for a while. Therefore, if you are an investor in long-term bond fund, you can think
of exiting the fund and entering short-term bond fund.

Fig: This figure illustrates the comparison between the RBI repo rate and the Federal Reserve
rate

Equity Market

How does the Fed rate cut impact equity markets? There are a variety of ways but here
are a few important ones.
Rate cuts reduce the cost of capital used to discount future cash flows of companies. This
enhances valuation of companies.
Falling yields reduces the cost of funds for borrowers and brings down the interest
burden on companies. This is also positive for equities.

U.S. Federal Rates and its Impact on India Page 24

Normally, a hike in interest rate in the US does not augur well for the emerging markets and
commodities. The reason being it strengthen the US dollar and weakens local currencies. This
will hurt companies with large import bills, however, the same benefit may not be accrued to
exporters due to strong competition in the export market.

However, this time, the tone of the commentary by the US Fed Chairman remained less
hawkish and hence we do not see much volatility in the exchange rate of INR against USD.
Also, the Indian equity market opened in the green today. One of the reasons for such
calmness is that most of what has unfolded was already priced in by investors.

Indian Real Estate Markets and Fed Rates

Real estate developers are different from companies, which are export-oriented. Exporters are
likely to become wealthier when the value of the dollar rises, because they are paid in that
currency. But, the revenues of developers of property in India are in Indian currency, the
rupee. But, if they have debt that they owe in the US dollar, their debt would rise, as the value
of the Indian currency will fall relative to the US dollar. When the dollar becomes strong,
their debt would become more of a burden.

If the US Fed raises interest rates, it might lead to a tightening of money supply across the
world. The Reserve Bank of India (RBI) might hike rates, too, and this might raise the cost of
borrowing for Indian home buyers and real estate developers.

A sharp interest rates rise by the Fed pushes a decline in new launches, and spending on
residential property.

However, when the rupee depreciates against the dollar, non-resident Indians (NRIs) would
be more interested in investing in markets here. This is because investing in Indian real estate
would become cheaper. This is especially true, if they buy ready-to-move-in properties in
India. But, if they invest in under-construction properties in India, they are likely to gain from
a strengthening dollar, but only if it remains strong. Their gains from investing in Indian real
estate would also decline, if the dollar weakens while they make the payment in instalments.

Home buyers, who invest in real estate in India, would benefit from the interest rate hike, if
they convert their money from the US dollar to the rupee after the Fed hikes interest rates.

U.S. Federal Rates and its Impact on India Page 25

Indian Bond Markets and Fed Rates

Figure: It shows the FED rates versus the 10 year Indian Government bond yield since 2009

Domestic bond markets have rallied sharply on account of rate softening by RBI as well as a
rate cut by the US Fed. India’s sovereign bond yield recently dipped to a 10-year low.

The US Fed cut rates taking into account muted inflation and global developments that
threaten to hurt growth prospects. It has left doors open for more rate cuts in the future. This
has boosted sentiment and fuelled bond market rallies worldwide.
Domestic bond markets have rallied sharply on account of rate softening by RBI as
well as a rate cut by the US Fed. Trimming of fiscal deficit target by the government and
planned shift in part of government’s borrowing to overseas markets (leading to lesser
domestic supply of government bonds) has also led to euphoria in the bond market.

U.S. Federal Rates and its Impact on India Page 26

Figure: It shows the difference between US 10 year bond yield against India 10 year bond yield with US fed rate
as the basis for comparison

U.S. Federal Rates and its Impact on India Page 27

 REFERENCES

1) PROM, K., LAM, J., KUMOK, Z. AND LOHANI, J.

Understanding the Fed Interest Rate and How It Impacts You
In-text: (Prom et al., 2019)
Your Bibliography: Prom, K., Lam, J., Kumok, Z. and Lohani, J. (2019). Understanding the Fed
Interest Rate and How It Impacts You. [online] MintLife Blog. Available at:
https://blog.mint.com/financial-literacy/understanding-the-fed-interest-rate-and-how-it-impacts-you/
[Accessed 7 Oct. 2019].

2) FEDERAL RESERVE SYSTEM (FRS)

In-text: (Investopedia, 2019)
Your Bibliography: Investopedia. (2019). Federal Reserve System (FRS). [online] Available at:
https://www.investopedia.com/terms/f/federalreservesystem.asp [Accessed 7 Oct. 2019]

3)VERMA, S.
US Fed cuts rate for the first time in more than a decade: Top highlights
In-text: (Verma, 2019)
Your Bibliography: Verma, S. (2019). US Fed cuts rate for the first time in more than a decade: Top
highlights. [online] Business-standard.com. Available at: https://www.business-
standard.com/article/international/us-fed-cuts-rate-for-the-first-time-in-more-than-a-decade-top-
highlights-119080100144_1.html [Accessed 7 Oct. 2019].

4) WHAT DOES THE FED RATE CUT MEAN FOR INDIAN BOND YIELDS?
In-text: (@businessline, 2019)
Your Bibliography: @businessline. (2019). What does the Fed rate cut mean for Indian bond yields?.
[online] Available at: https://www.thehindubusinessline.com/money-and-banking/what-does-the-fed-
rate-cut-mean-for-indian-bond-yields/article28780048.ece [Accessed 9 Oct. 2019].

U.S. Federal Rates and its Impact on India Page 28