Expect a no-action policy, focused on growth

If growth picks up in the second half of the year, February is the earliest we may see the RBI changing its stance by raising the reverse repo rate

Global central banks are currently divided into two camps. One believes that the phenomenon of rising inflation is transitory and it’s too early for a policy response to contain it; the other has started raising interest rates to bottle the inflation genie.

At the forefront is the Russian central bank. It has raised interest rates four times since March, including by a full percentage point in July. This is the trend in most emerging markets. Brazil has raised its policy rate thrice this year. Mexico, Hungary and the Czech Republic have also joined the bandwagon, while China was tightening its monetary