ByAjitabh Bharti, Executive Director and Co-founder of CapitalXB, has shared his perspective on the Fed’s decision and its potential implications for the Indian economy.
The Fed’s latest decision has come across as notably dovish and somewhat surprising, given that inflation continues to run well above target. Easing the policy stance at this stage carries a genuine risk that the central bank could lose control of price pressures just when credibility matters most. The timing also invites scrutiny: with midterm elections approaching, monetary policy appears to be yielding to political pressure. Once markets begin to question the Fed’s independence, the dollar’s anchor weakens, a risk that remains underappreciated. From India’s perspective, however, the development is welcome. A softer Fed relieves immediate pressure on the rupee, steadies capital flows, and affords domestic policymakers greater room to manoeuvre.
