A stronger dollar could make India's inflation fight tougher
Dollar value increment will make all imports expensive as it will add to inflation. In intraday trade, the rupee hit a new low of 78.28 and closed below 78 mark for the first time.
Dollar value increment will make all imports expensive as it will add to inflation. In intraday trade, the rupee hit a new low of 78.28 and closed below 78 mark for the first time.
As per data from depositories, FPIs took out INR 10,080 crore from equities, INR 4,830 crore from the debt segment and INR 24 crore from hybrid instruments.
This shift in stance by the Fed from its earlier complacency is rooted in the change in its description of inflation from transitory to persistent and widespread. The spurt in core inflation to nearly 5% (core CPI) along with rapid wage growth (10% YoY in Oct’21) is creating a risk of inflation getting entrenched, according to the FOMC statement.
Prices of food and energy, which are set on world markets, have risen sharply everywhere. The interaction of an uneven economic recovery with the lingering effects of the pandemic has led to extensive supply chain problems.
The consumer price index rose 5.4per cent in September from a year ago, the Labor Department said Wednesday, up slightly from August's gain of 5.3per cent and matching the increases in June and July, which were the highest since 2008.
The price spike has prompted fears the Federal Reserve might feel pressure to roll back easy credit and other stimulus. But Fed officials indicate they believe the surge is temporary and they will keep interest rates low until a recovery is established.