It's not the 'foreign hand'.

"Federal Reserve policymakers may need to lift US borrowing costs above the 5.1% they penciled just this week, and keep them there perhaps into 2024 to squeeze high inflation out of the economy, three of them signaled." ET. This, despite the fact that "Inflation in the United States slowed again last month" as "Consumer prices rose 7.1% in November from a year ago, the government said." CPI inflation was 7.7% in October and 9.1% in June. "US producer prices rose slightly more than expected in November" as "In the 12 months through November, the PPI increased 7.4%. That was the smallest gain since May 2021." Reuters. In response, "The Federal Open Market Committee raised its benchmark rate by 50 basis points to a 4.25% to 4.5% target range. Policymakers projected rates would end next year at 5.1%." ET. Why should it take till 2024 for the rate hikes to take effect? Because, "Inflation is largely self-fulfilling [in the US], so if people expect higher inflation, they ask for more money at work. raise prices on what they sell or on the rent they charge," wrote Allison Schrager. "The role of expectations is potentially even more powerful than raising rates." The problem is that, "Despite a slowdown in the US, job vacancies are still very high, with the unemployment rate at a 50-year low. This has been feeding into wage inflation," wrote Vivek Kaul. "Higher interest rates in the US encourage investors to move money from different parts of the world, including India, to the US. This puts pressure on other currencies, including the Indian rupee." "The US basically ends up exporting inflation to other parts of the world." The solution would seem simple - the Reserve Bank (RBI) just needs to keep pace with the Fed and raise rates in India. However, on 7 December, the RBI "expectedly raised the benchmark lending rate by 35 basis points (bps)" even though it "kept the inflation forecast unchanged at 6.7 percent for the current fiscal". DH. Which is surprising because, "Terming the Indian economy a bright spot in the otherwise gloomy world, the RBI lowered its estimate of GDP growth to 6.8 percent in the fiscal ending March 31, 2023." That should make India the fastest growing major economy in the world. "India is on track to become the world's third largest economy by 2027, surpassing Japan and Germany, and have the third largest stock market by 2030, thanks to global trend and key investments the country has made in technology and energy." Morgan Stanley. But, surely if so much wealth is created in India, consumer demand will soar and inflation may soar with it? Niggardly rate rises by the RBI means that, "Twelve-month implied rupee yields - typically a reflection of interest rate differentials with the US - fell to the lowest level since 2009 last week." Bloomberg. "With the RBI widely expected to end a rate-hike cycle early next year, and the Federal Reserve seen peaking toward the middle, the interest-rate differentials are expected to worsen, further pressuring the carry trade and ultimately the rupee." Why blame the 'foreign hand'? Serve the nation. Not self interest.