Markets won't be surprised by mild US taper: FM

Says India is better prepared to handle taper now than in May

Finance Minister P Chidambaram today said that $10 billion reduction in $85-billion bond-buying programme by the US Federal Reserve is a moderate change and the markets will not be surprised by these changes.

He also said that India is now better prepared to deal with the situation arising out of tapering of quantitative easing than in May, 2013.

"Government is of the view that markets had already factored in the US Federal Reserve's decisions and therefore are not likely to be surprised by these moderate changes. Besides, we are better prepared than in May, 2013 to deal with the consequences, if any, of the US Federal Reserve's decisions," Chidambaram said in a statement issued here.

The US Federal Reserve has announced that it will continue to purchase securities at the rate of $75 billion a month than the earlier level of $85 billion, the Finance Minister said, adding this is a mild reduction. Besides, "US Federal Reserve has not announced any sequential reduction," he said.

After, the US central bank announced the taper, Chidambaram spoke to RBI Governor Raghuram Rajan early this morning.

"The government has taken note of the statement issued by the US Federal Reserve on the taper. This morning, I spoke to Raghuram Rajan, Governor, RBI," the finance minister said.