The 9.1 percent US June inflation appears to have reset macro expectations. The US markets are now upping bets on a possible 100 basis points (bps) rate hike in the July 27 Federal Open Market Committee (FOMC) meeting, versus the 75 bps earlier. The US 2-year bond yields are now sharply higher than the US 10-year yield indicating frontloaded rate hike expectations and backloaded recession fears.

A parallel development is that many central banks have raised rates more than expected, this week. This includes the Bank of Canada, Bank of Philippines, and the Monetary Authority of Singapore. While just a little earlier, Bank of Korea and the Bank of New Zealand also raised rates by 50 bps, both higher than expected.

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The US dollar index after remaining ranged immediately after the CPI number started surging in Asian trade, taking all Asian currencies lower. The Indian rupee consequently touched a new all-time low and inched to the 80 per dollar mark.

Currency dealers are interpreting some of the central bank rate hikes as a means to shore up confidence in their respective currencies or at least slow the pace of depreciation.

So does the Reserve Bank of India (RBI) have to follow suit? Or is India in a better place with inflation peaking? Sajjid Chinoy, Chief India Economist at JPMorgan; Ananth Narayan, Professor at SPJIMR; Kaushik Das, Chief Economist at Deutsche Bank; and Neeraj Gambhir, President and Head of Treasury and Markets at Axis Bank discussed the impact of the US CPI and resulting global flux on India.

Also Read: Indian economy to grow 7.1-7.6% in current fiscal: Report

For the entire discussion, watch the accompanying video