Central banks in multiple large economies have paused or are in the process of attempting to pause interest rate increases. Based on recent comments, we expect the Fed to join the monetary tightening pause club in June. However, given the prevailing inflation rates it is premature to conclude that the end of the global rate hike cycle is imminent. For India, despite headwinds from external developments and some signs of sequential moderation from some high-frequency data and the effects of unseasonal rains, the base case remains for a solid, albeit more moderate paced, economic expansion. Further, the continued easing in inflation reinforces our expectation of a pause for an extended period unless inflation surprises dramatically on the upside.
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