recently there was a interest rate cut by US fed. So, I know that interest rate cut is very much positive our equity market will get a huge inflows and loans will also increase. But my question is what will happen if we don’t follow interest rate cut by FED US. There will be any negative impact on our Economy in macro levels ?
Theoretically, if emerging economies do not follow interest rate cuts by Fed, their currencies will start appreciating against US dollar, and thus hurting their exports demand.
To stop currency appreciation, Central Bank will have to keep selling rupees (buying dollars) in forex market, leading to higher debt levels in the economy.
