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The back-to-back rate hike by the Reserve Bank of India (RBI), in June and in August policies, make sense when looked in conjunction with what other countries in the region have been doing.
Indonesia and the Philippines, two nations that run twin deficits like India, have hiked their rates by at least 50 basis points. Even as the RBI maintains that its policies are driven by domestic inflation, the fact that it is moving in line with other countries in the region points out it doesn’t want to remain behind the curve on rates.
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