With inflation now having clearly passed the peak and domestic demand showing signs of softening, we think the MPC will mark the end of the tightening cycle with a final 25bp hike to the repo rate (to 6.50%) at the conclusion of its meeting on Wednesday 8th February. Further ahead, we think the RBI could lay the groundwork for cuts before the end of the year and start delivering them in early 2024, sooner than the consensus expects.
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