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Consumer Prices (Jul.) & Industrial Production (Jun.)

The bigger-than-expected drop in inflation in July is a challenge to our view that the MPC will hike the repo rate by 50bps again next month. But core inflation remains pretty strong, and the industrial production data suggest the economy is holding up fairly well. In all, we think the MPC will wait for more evidence of easing price pressures before scaling back the pace of policy tightening.

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