Recently, the Federal Reserve cut the Discount and Fed Funds rate by 25 basis points. However, the Fed did mention the risks of inflation and high prices of commodities for the economy. Here are some valuable points by a few analysts on global inflation impact on Indian markets, issues linked to commodities, futures and regulations.

Brad Zigler: Because of its size, purchasing power and productive output, the US economy is a powerful force in world trade. A slowdown is bound to generate global ripples. But the US is a part, not the entirety of the global economy. For years, the US has been importing deflation to its shores from surplus labor markets such as India and China. Now that indigenous inflation has risen in those markets, the economic utility has changed.

What accounts for India's inflation spiral? The Reserve Bank of India (RBI) offers us a clue. The broad M3 monetary aggregate has been ballooning recently. Of course, India is not alone in that, but the relative size of the inflation is significant.Indian GDP is not growing at such a fast clip. That's a classic recipe for inflation: Too many rupees chasing too few goods. Until infrastructure improvements boost productivity, I'm afraid, this will be a continuing problem.

US economy is expected to grow at 0.50% in 2008 as compared to 2.20% in 2007. Asia (including Japan) and European growth will also slow as result of US recession. Asian growth is expected to grow at 6.20% in 2008 (from 7.40% in 2007) while European economic growth is expected to decline sharply, by 1¼ percentage points to 1.50% in 2008. India and Chinese GDP growth rates will fall marginally by 0.50% in 2008 (from 2007 growth). Japan and Australian growth rates will also slowdown in 2008.

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