NEW DELHI, Jan. 17 -- First they twisted. Then they swapped. And then they tripped over a bond vigilante.
India's central bank may have played the bond yield curve through its Operation Twist and even done a swap with the government directly. But nothing prepared it and bond investors for the rude shock of inflation.
The retail inflation print for December came in at a shocking 7.35%. Having breached the sacred 2-6% flexible inflation target, this is enough to put the monetary policy committee (MPC) on guard.
The outlook on retail inflation is further worsened by fired-up global crude oil prices and the tariff hikes by telecom companies.
Obviously, policy rate cuts are not coming for an extended period of time now. "This was truly a qui...