After a year to forget in 2019, a combination of policy loosening and more effective measures to deal with the malaise in the shadow banking sector will push economic growth in India back up to a healthier pace in 2020. And with core inflation set to rise, markets are wrong to assume that interest rates will stay on hold for the next two years. We think the RBI will switch to tightening mode much sooner than generally expected, possibly before the end of this year.
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