Reserve Bank of India hiked the Cash Reserve Ratio late on Tuesday evening by 0.5% ( or as the RBI will put it 50 basis points).
This is being seen as a part of the central bank's move to reign in the runaway inflation. This move will suck money out of the banking system and hence reduce liquidity. As a result, cost of money is expected to increase, in other words, interest rates are like to increase ( 'harden' as some would have it)
Under the circumstances, I would expect the markets to react negatively to this news Wednesday.
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