'Inflation V Growth' Dilemma To Take Centre Stage

India's central bankers will face a niggling policy headache in the months ahead, as a return of inflationary pressures tests the Reserve Bank Of India (RBI)'s ability to keep rates on hold. On balance, we do not expect the tightening phase to kick off until January next year, and even then, we see only minor tweaking of 100bps (which would take the repo rate to 5.50% by end-2010).

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