US in Recession Too!

Today's news suggests that American inflation is pushing up rapidly, with a 1.1% increase in the Consumer Price Index (not core inflation).  This clearly suggests the US is already in a virulent Recession also, and the news today was not good. 

In part, this is good news for India, because the Federal Reserve will very soon start to "move against" inflation, by raising the its prime rate.  That will cause the US$ to appreciate against other currencies, allowing the Rupee to also get stronger, even with the policies of RBI, which will begin to ease the pain.  I am still emphasizing, though, that the RBI' steps are much too tepid to date, and the Fed cannot solve all of India's problems. 

By the way, the drop in the oil price today was a direct result of the foregoing, in that hawkish words from Chairman Bernanke, in his testimony to Congress, will naturally make investors think of rate hikes, which mean in turn stronger US$ and lower oil prices.  Therefore, if speculators are manipulating oil, they're probably starting to look for a way to sell short!