We are in agreement with financial market and analyst expectations that rates will be left on hold at the upcoming policy meeting of the Reserve Bank of India (RBI) on Wednesday 7th February. However, while most are also expecting rates to remain on hold for a prolonged period, we think that elevated core inflation and looser fiscal policy will prompt the RBI to raise rates before too long. The central bank is likely to strike a more hawkish tone next week, and we are strongly non-consensus in expecting rate hikes later this year.
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