$600 million pumped into the US economy to improve the liquidity position. I seriously doubt how far this push would increase the employment in the US economy. The money that Fed pumps with open market operations goes into the pockets of the elite group who has excellent market information to catch arbitrage opportunities.
With raising interest rates in India and keeping in mind the recent RBI reactions in liquidity control to tame inflation, if I am the investor, India would be my choice. The reasons being
1) Fast Growing economy and the market
2) Abundance of the dollar might decrease its value
3) The gut feeling and the sentiment on the stable policies (??!! There should be some reason for this)
I have become a big fan of Dr.Subbarao for taking such a proactive measure (There might be many reasons for this) and I hope they should be able to achieve inflation targets on demand side. Supply side is left to the monsoon which is positive, and to the government spending which is again encouraging. The financial end is so far so good. My friend expects the index to cross its all time high. I expect things accelerate without any bubbles.
Oh! Not again an injection with air bubbles! Do we need a regulation on hot money or does this sentiment lasts long?? Lets wait and watch….
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