OpinionEconomix: Govt shutdown, rate cut—US policy paralysis has created an opportunity for India

When the US Federal Reserve reduced its interest rate by a
quarter percentage point last week, establishing the target range
at 3.75-4 percent, it was not a bold stimulus but rather a
cautious act of navigation. A prolonged government shutdown has
left the Fed operating with limited information on inflation and
jobs. For India, this development influences the global cost of
capital, investor behaviour, and the overall pace of trade. The
rate cut was determined under extraordinary conditions. US GDP
grew at an annualised rate of 3.8 percent in the second quarter,
but more recent indicators suggest a cooling trend. Unemployment
has risen to 4.3 percent, job creation has decelerated, and
consumer spending is stabilising. Although inflation has
decreased to approximately 3 percent year-on-year, it still
exceeds the Federal Reserve’s 2 per cent target. Typically,
policymakers would review fresh September data before making
decisions, but since those reports never came, the Federal
Reserve had to rely on August data. Bidisha Bhattacharya has more
in #ThePrintEconomix----more----Read full article here:
https://theprint.in/opinion/economix/us-interest-rate-cut-india/2776495/