The global economic slowdown broadened further in November while inflation started to come down in most economies. As such the central banks have begun tapering the pace of rate hikes, however they will look for clearer signs of labour market and demand weakness before considering a pause to the ongoing monetary tightening. Defying the global momentum, the Indian economy continued to grow solidly in Q2 FY23 and is showing signs of resilience going into Q3. Near term prospects appear bright. The RBI stepped down the quantum of rate hike to 35-bps while inflation fell below the 6% mark for the first time in eleven months. We expect another 25-35 bps hike in February following which the central bank is likely to hold rates at that level for the rest of 2023.
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