India's central bank may hike rates

What happened: The Reserve Bank of India (RBI) held its benchmark interest rate at 5.25% on Friday, despite surging global energy costs and inflation risks. The central bank also cut its growth outlook and raised its inflation forecast. However, market sentiment suggests a potential rate hike in the future, with some analysts suggesting the RBI may follow Indonesia's lead to defend its currency.

Market impact: Indian shares opened cautiously ahead of the RBI's rate decision, with markets expecting measures to boost inflows and support the local currency. The potential rate hike could impact sectors sensitive to interest rates, such as banking and real estate, while supporting the rupee and potentially attracting foreign inflows.

What to watch next: The next monetary policy review on June 6-8, 2022, will be crucial to see if the RBI indeed hikes rates. Additionally, the release of India's Consumer Price Index (CPI) data on May 12, 2022, will provide further insights into inflation trends, potentially influencing the RBI's next move.