The Trump approach has helped the Fed rates stay lower than the original anticipation. Now even the Fed is talking about keeping the equilibrium Fed rates lower than the pre-crisis levels. Also, the focus on growth and consumer liquidity has forced the Fed to be cautious on rate hikes as consumer spending can be inflationary and could have a dual impact if the rates were also hiked.

Trump goes on a major liquidity infusion spree to spur industry. Trump is more likely to favour low rates in the US and despite one rate hike in December the trajectory is more likely to remain downward. That is good news for India. It leaves the RBI greater leeway to cut repo rates further from here assuming that inflation stays under control. It will also mean that the robustness of FPI flows into India will continue as the shift to risk-on will become more prominent.

It is hard to say if Trump will eventually manage to make America great again. Over the last 15 years since 2001, the US has spent an exorbitant amount on wars in Iraq and Afghanistan, taken its debt to unsustainable levels and created stagnation in jobs and growth within the US. Trump wants to change that. As he goes about his task, India may actually have a lot to celebrate!