CNBC's Inside India newsletter: What happens when the Fed cuts rates?

This report is from this week's CNBC's "Inside India" newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe  here.

The Federal Reserve is almost certain to start its rate-cutting cycle next week.

Historically, a rate cut has been a signal for central banks in emerging markets, like India, to follow by easing monetary policy in their regions.

However, this time, it's likely to be different.

When will India cut rates?

The latest data shows that the inflation rate appears to be heading in the wrong direction in India. The headline inflation rate rose in August to 3.65% compared to 3.6% in the previous month. Food prices, which constitute a large proportion of overall inflation, appeared to be one of the big drivers.

Is it a cause for alarm? Not really, since the latest figures are still below the Indian central bank's target of 4%. Instead, markets have simply hit snooze on a rate cut by the Reserve Bank of India for the moment.

"The slight rise in India's headline CPI inflation in August reinforces our view that the Reserve Bank will proceed with a bit of caution and keep rates unchanged in its next meeting in October," Shilan Shah, deputy chief emerging markets economist at Capital Economics, told clients. "But it won't wait until any later than December to begin loosening policy."

But as Inside India covered last week, India's GDP slowed to 6.7% in the second calendar quarter compared to last year's 8.2%, piling pressure on the central bank to take its foot off the brakes sooner rather than later.

A rate cut by the Fed is also widely expected to provide more immediate relief to the Indian rupee,