Tightening to begin with reverse repo hike

After months of incremental moves, we think the Reserve Bank of India (RBI) will take a decisive step towards policy tightening by hiking the reverse repo rate at the conclusion of its MPC meeting on Wednesday 9^th February. And with inflation likely to become more of a concern over the coming months, we also think that that the key repo rate will be hiked by more this year than the consensus is expecting.