Fed Raises Rates as India Faces Inflation Pressure

India’s rising food, fuel and underlying inflation led Nomura and other analysts to expect the Reserve Bank of India to raise its repo rate by 25 basis points at both its October and December meetings, potentially taking it to 5.75%. August consumer inflation was about 4.8%, while oil prices above $100 a barrel, strong growth, weather risks and possible global monetary tightening added pressure on the RBI, although Nomura viewed the moves as limited recalibration rather than the start of a prolonged tightening cycle. The Federal Reserve unanimously raised its benchmark interest rate by 0.25 percentage point to a 3.75%–4% target range, its first increase since July 2023 and the first major policy action under Chair Kevin Warsh. The Fed cited inflation above its 2% target for more than five years, along with energy prices, geopolitical tensions, strong consumer spending and robust investment, and most policymakers projected at least one additional quarter-point increase by the end of 2026 with rates remaining elevated through 2027. The decision rejected President Donald Trump’s calls for lower rates and highlighted the Fed’s prioritization of price stability despite political pressure; markets had largely anticipated the move, though higher U.S. rates could strengthen the dollar and pressure emerging-market equities such as India’s.