“Apart from managing inflation, the central banks’ role is also to maintain the equilibrium on interest rate differentials, to curb outflows in a rising interest rate scenario. EMs benefitted more than developed markets (DMs) during the easing cycle, but now there is more pressure on EMs to move in tandem with DMs on interest rates as they are heavily reliant on foreign funds,” said Madan Sabnavis, chief economist at Bank of Baroda.
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