RBI could have been more circumspect in timing: Alphaniti Fintech's UR Bhat

• The Reserve Bank of India’s (RBI’s) surprise rate hike adds a new dimension of uncertainty to the markets, says U R BHAT, co-founder and director, Alphaniti Fintech. In conversation with Sundar Sethuraman, Bhat says policymakers should usher in changes gradually, so that markets get a fair idea of what to expect. Edited excerpts:

How will the central bank’s pivot to a tighter monetary regime impact equity markets in the long run?

Inflation and higher interest rates are not unmitigated catastrophes. They moderate purchasing power and therefore, demand. They also raise the cost of equity and consequently weigh on equity valuations.