JPMorgan's Aziz: Fed to Cut Rates Once More, Rupee Weakness Due to Capital Flow Issues

• JPMorgan's Jahangir Aziz predicts one final Fed rate cut in January 2026, citing slowing US job creation.
• The rate cut will be followed by a long pause, with potential rate hikes only in 2027.
• Rupee depreciation is linked to weak capital inflows (muted FPI, stagnant FDI), not a high current account deficit (1.2% of GDP).
• Allowing rupee adjustment is crucial to absorb external shocks and avoid monetary policy constraints.
• India's headline inflation may rise modestly in 2026, but weak core inflation signals economic slack.

Why It Matters: Fed likely to cut rates once more; Rupee's struggle stems from capital flow issues, not current account deficit.