Inflation surge sets stage for June rate hike

We’ve been arguing for several months that both the consensus and the RBI have been underestimating the upside threats to inflation. Consumer price data for March released this week have reinforced our view. With inflation set to rise further in the near term, we think the MPC will respond by hiking the repo rate in its June meeting. We are sending this Weekly one day earlier than usual because our offices are closed for Good Friday on Friday, 15th April.

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