Pace of tightening set to slow

The RBI has frontloaded policy tightening over recent months but with inflation peaking and economic headwinds building, we think the central bank will now slow the pace of tightening and revert to 25bp hikes. Our forecast is for the repo rate to rise a further 50bp to 6.40% by Q1 2023. Rate cuts could come onto the agenda for early 2024, several months sooner than the consensus expects.

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