Market participants remain wary due to concerns about the potential impact of on global trading patterns and inflation. Analysts at MUFG Bank have noted that the new tariffs are already starting to feed into US inflation data, and this makes the upcoming July US inflation report a critical indicator for policymakers and investors.
Expectations are high for a Federal Reserve rate cut in September, with futures markets pricing in approximately a 90% chance of that rate cut. Any shift in this outlook, driven by inflation surprises, could alter capital flows into emerging markets, including India.
