RBI rate hikes, policy normalisation inevitable as inflation surges: Nomura

Central bank has worked to keep borrowing costs at a record low to ensure a durable economic recovery in the face of risks from the omicron coronavirus variant.

The Reserve Bank of India will likely start raising borrowing costs from April as fresh curbs to tackle a resurgent Covid-19 outbreak could disrupt supply chains and drive consumer prices higher, according to Nomura Holdings Inc.

“It’s a more complicated situation for RBI, but substantial further delays in normalization would be tough because the global monetary policy backdrop is changing,” Sonal Varma, chief economist for India and Asia ex-Japan at Nomura, said in an interview to Bloomberg Television’s Rishaad Salamat and Haslinda Amin. “We are expecting 100 basis points of cumulative hikes this year.”

With inflation staying within target most of this