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On hold for now, but tightening cycle not over yet

The recent drop in headline inflation, coupled with the sharp fall in global oil prices, should be enough to ensure that the RBI keeps policy rates on hold at the conclusion of its meeting on Wednesday 5th December. However, with core inflation still elevated and the MPC placing significant emphasis on ensuring that it doesn’t fall behind the curve and compromise its credibility, we think the tightening cycle still has a little bit further to run.

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