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RBI maintains hawkish tone amid food price surge

The RBI kept the repo rate on hold at 6.50% today as expected and maintained a hawkish tone amid the recent surge in food prices. It’s unlikely that the rate hiking cycle will restart. But there is a significant risk of the easing cycle that we expect to begin in Q1 getting pushed back into the middle of next year, much later than in many other major EMs.

This is an expanded version of our initial Rapid Response with additional charts and analysis.

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