The US is over 8,000 miles away.

"The consumer price index showed a 12-month inflation rate of 2.7% after increasing 0.3% on the month, the Bureau of Labor Statistics reported. The annual rate was 0.1 percentage points higher than October." CNBC. "The US central bank cut interest rates.., as expected, but Federal Reserve Chair Jerome Powell said more reductions in borrowing costs now hinge on further progress in lowering stubbornly high inflation." "Powell's explicit - and repeated - references to the need for caution from here on jolted Wall Street, sending stocks sharply lower, bond yields higher and leading investors to dial back estimates of how far borrowing costs are likely to fall over the coming year." Reuters. The Fed cut its Funds rate by 0.25% to 4.25%-4.5% but the Dow Jones Industrial Average closed down 2.58%, "The S&P 500 lost almost 3% and the Nasdaq Composite fell 3.6%." BBC. So what? India is 13,595 km or 8,448 miles from the US so it should not matter to us. It did. "The Indian rupee weakened to a record low of 85.10 against the US dollar (India Today) because "India's economic growth moderated to a seven-quarter low of 5.4% in the second quarter of FY25 (ET), "India's merchandise trade deficit in November widened to an all-time high of $37.84 billion from $27.1 billion in October" and "the US Federal Reserve's projection of fewer rate cuts in 2025 amid sticky inflation has strengthened the US dollar, making emerging market currencies like the rupee more vulnerable." Matters could have been worse but for the record $129 billion, or Rs 10.7 trillion, in remittances sent by Indians living abroad. It was Rs 8.95 trillion last year. News18. In its December meeting, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) voted 4:2 to keep the interest rate unchanged for the 11th time at 6.25%. ET. MPC member Nagesh Kumar voted for a 25 basis points cut in the interest rate because "the repo rate cut "would help in reviving economic growth without worsening the inflationary situation". ET. "India's forex reserves dropped by $1.988 billion to $652.869 billion for the week ended December 13, the RBI said." BS. It is down from $704.89 billion from the week ended 27 September. BS. This is because the value of reserves keeps changing and also because the RBI has been selling dollars to soften the fall of the rupee. A weak rupee makes imports more expensive and increases consumer prices. However, selling dollars in exchange of rupees creates a shortage of the currency in banks and forces lending rates higher. So, the RBI conducted a variable repo rate auction (VRR) for an amount of Rs 1.50 trillion but received bids of Rs 2.01 trillion, indicating a strong demand for funds from banks amid a huge liquidity deficit. FE. "The US goods and services trade deficit with India was $45.7 billion in 2022." ustr.gov. The stock market index the Sensex has fallen 4,100 points in one week because of the US Fed's hawkish outlook on rate cuts. TOI. When the RBI is conducting gymnastics to protect the rupee while ensuring enough money in banks, how will a 25 basis points rate cut set fire to economic growth? And, Donald Trump hasn't been sworn in yet. Being an MPC member seems very easy. Just cut rates.