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Rates to drop to lowest in almost a decade

We agree with financial market and analyst expectations that rates will be cut by another 25bp at the conclusion of the Reserve Bank of India’s (RBI’s) policy meeting on Thursday 5th December. This would bring the repo rate down to its lowest since early 2010. But with the effect of past stimulus likely to be felt gradually over the coming months and the inflation backdrop set to turn more difficult, we are firmly non-consensus in expecting modest rate hikes by the end of next year.

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