According to a source cited by Reuters, the RBI is in calibrated tightening mode across the board and will keep assessing further steps, including liquidity measures. It could discuss a 50-basis-point rate hike at its December review if inflation warrants front-loading, a possibility HSBC and State Bank of India have also flagged. Since March, the RBI has mobilised about $150 billion through inflow-attracting measures, while continued dollar sales have drawn down reserves and the cost of betting against the rupee has hit a five-year high. Domestic bond yields have risen 45 to 60 basis points since early September, and overseas investors have sold nearly $33 billion of Indian equities this year. Analysts warn that rapid tightening could slow growth, as nearly 60% of loans are linked to external benchmarks such as the policy rate and would reprice quickly.
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