Tightrope walk

US Fed has made RBI's job tougher

The United States Federal Reserve’s decision to raise policy rates for the third time in 2018 was expected. However, it will mean a perpetuation of existing trends that are becoming cause for worry for India’s central bankers and economic policymakers. The dollar is likely to continue strengthening, and dollar yields will also likely rise, given that more Fed hikes are in the offing through 2019-20. This means crude oil will become more expensive in rupee terms. In addition, the Fed is reducing the size of its balance sheet to “normalise” after a long period of quantitative easing. Higher crude oil