............Indian politicians are hypersensitive to inflation in election years so, the RBI could actually get tacit support from the government. Hiking rates probably won't work since food inflation is driving the indices up. Food is near 15 per cent despite a good monsoon and excellent agro performance. Rate hikes won't do much to pull food prices down in the absence of structural reforms in the distribution and procurement structure. But Rajan might pull out the sledgehammer anyhow. Higher treasury yields and the recent rate hikes by the State Bank of India and other banks indicate market expectations............
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