While base effects caused a sharp slowdown in headline GDP growth in India in Q3 (Q2 of FY22/23), growth held up well in quarter-on-quarter terms. However, there are signs in more timely activity data that domestic demand is softening now in response to higher interest rates. The RBI is likely to take heed and slow the pace of rate hikes next week, and probably end its tightening cycle early in the new year.
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