Recent India data show that inflation pressures have eased while the gain in industrial production has slowed sharply. External risks have climbed too. Nevertheless, non-food inflation is unlikely to slow far and GDP growth still looks set to stay rapid. What’s more, policy rates remain low in historical terms. The chance that the Reserve Bank (RBI) pauses soon has increased but we still anticipate that rates will move up a further 100bp over the next 12 months and that the next hike will come in mid-September.