Will the RBI also follow the example of the US Fed and hike rates aggressively?

Remember the US Fed has already pencilled in 4 rate hikes and has been talking hawkish. These 4 rate hikes in 2022 will take the rates to the range of 1.00%-1.25%. For now, the Fed has only made announcement and we need clarity on action points by the US Fed. Fed may also be just testing waters to see if the global central banks also follow suit and get hawkish. That will help the Fed assess the risk of likely monetary divergence.

In Fed-22 policy, the RBI may choose to hold status quo on rates although RBI may consider a stance shift from accommodative to the neutral. RBI is likely to wait till there is clarity on growth revival. Indian rate cuts were more calibrated than the US rate cuts. The US has 1.8% treasury yields with 7% price inflation. In India, the gap is actually positive. It does look like the RBI may prefer to err on the side of caution.