......Finally, to me, this monetary policy would be more of a watch-and-go policy for the RBI. If the tightening by the Fed is more aggressive than the priced-in amount of $5-10 billion withdrawal a month, then there may be no option for the RBI but to hike the repo rate. Or else, the chosen strategy could be to narrow the interest rate corridor from the current 300 bps to say a 250 bps to start with—by reducing the MSF rate by 25 bps and also increasing the repo rate by 25 bps. These are interesting times and I consider it a privilege as a macro-economist to witness such a phase in my career span.
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