EM monetary policy has turned decidedly more hawkish in recent weeks. But, with a renewed surge COVID-19 infections a downside risk to India’s recovery, we don’t think the Reserve Bank will be joining the EM rate-hiking club in its policy meeting next week or any time soon. Another key point of interest will be the government’s proposals for the RBI’s inflation-targeting framework. Both band widening and shifting the focus to core inflation have been suggested, but we don’t expect any changes.
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