The Reserve Bank of India (RBI) today announced a 50bp hike in the repurchase rate, to 8.5%, and plans for two 25bp hikes in the cash reserve ratio next month, taking it to 8.75%. The move is an appropriate rebuttal to the mounting criticism that the RBI had done “too little, too late” to stem rising inflation. However, with the quick succession of recent tightening measures, along with the more hawkish tone of recent statements, the RBI may avoid having to hike rates much more.
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