Mint Quick Edit | Would a Fed rate cut be good news for India?

Weak payroll data could weigh heavily on the minds of policymakers. In August, the US economy added just 22,000 jobs, while data revisions revealed 13,000 jobs were lost in June, the first loss in almost five years.

If rate-setters hesitate to ease lending, it would be because US inflation is above the Fed’s 2% aim, even as US tariffs could drive prices further up.

Yet, even without a dictatorial White House, the Fed’s dual mandate might see employment maximization take priority over price stability. The irony is that Trump’s policies may have contributed to a job slowdown as well.

A Fed rate cut would offer the Reserve Bank of India elbow room to lower its own policy rate without risking extra capital outflows led by US bonds turning relatively more attractive than Indian assets, as may happen if yields drop here but not in America. Faced with growth headwinds, we need as wide a policy toolkit as we can prudently manage.