Norway became the latest central bank to cut interest rates in an unexpected move that suggests the battle against slowing growth is not over yet, despite United States Federal Reserve chair Janet Yellen’s apparent readiness to raise interest rates. In my perspective, the Fed was stressed over how far business sector desires were changed after what numerous, rightly, had deciphered as Yellen’s uber-dovish question and answer session taking after the hold in September.

Global turmoil triggered by devaluation of yuan and reports of slowing growth in China has impacted Indian currency and stock markets.

But a mere token reduction of only 25 basis points “won’t do much” for the rupee, market watchers said.

Bullard, president of the St. Louis Federal Reserve Bank, participated in the meeting but doesn’t have a vote this year on monetary policy.

A rate hike could potentially lead to massive amounts of pull-back of foreign funds from emerging economies like India.

The Fed has two remaining meetings for this year, October 27-28 and December 15-16.

“Yellen gave little sense of confidence that the Fed would meet its inflation mandate, and cited global economic and financial developments – a veiled reference to the dollar – as acting as a drag to growth and inflation“, wrote Antoine Gaveau, associate rates strategist at JP Morgan.

He cautioned, though, that any government shutdown caused by battles over the federal budget or a failure to raise the government’s borrowing limit in a timely way could cause the Fed to further delay a rate increase. If interest rates have been kept low for too long, it could overheat the economy, leading to high inflation. It last raised rates in 2006.

Dudley also reiterated the Fed’s decision that rate increases will be based data dependent, rather than on the calendar.

What about inflation? It was mentioned 13 times in the Fed’s most recent policy statement, and has been stuck below the Fed’s 2 percent target.

Friday’s non-farm payrolls data is expected to show the USA economy added 203,000 jobs in September with the unemployment rate holding steady after falling in August to 5.1 percent, its lowest since April 2008.

But Dudley said he now feels inflation could reach that target sometime next year, a year or more sooner than the median forecast by Fed policymakers earlier this month.

Wall Street’s main concerns are low inflation and a strong dollar: the subsequent Fed’s protraction over hiking the interest rate is stirring the threat of asset bubbles.

Yellen said Fed officials still think the depressive effects of the dollar and energy prices will fade, allowing inflation to return to the 2 percent level. “We expect firm spending ahead as employment remains solid and wages begin to accelerate”. Higher rates, resulting from inflation consistent with the 2% target, could also help depreciate the dollar thus helping profitability of U.S. businesses’ global operations. This was obviously a very wrong call and the European Central Bank was forced to start cutting rates again in November 2011 and over the following three years the official interest rate was taken all the way down to just 0.05%, which is where it stands today.