Rate hike spurs aggressive tightening bets

Unexpected rise: A vendor waiting for customers at a fruit stall in Mumbai. India’s central bank announced a surprise interest rate hike, as Asia’s third-biggest economy reels from galloping inflation. — AFP

NEW DELHI: After being lulled into complacency as recently as February that India’s central bank will not tighten policy anytime soon, investors have swung the other way and are factoring in sharp increases by the monetary authority that is grappling with surging inflation much like its counterparts globally.

Nomura Holdings Inc expects the central bank to raise its benchmark repo rate to 5.75% by end-December from 5% earlier. Barclays Plc said the central bank’s aggressive tightening on Wednesday has fueled expectations of a 75-point increase in the June policy.