Two sets of data to be released this week - industrial output growth for August and consolidated monthly inflation for September - would largely determine the Reserve Bank of India's (RBI's) next move on interest rate hikes. Policy makers are facing a harsh dilemma: a slew of fiscal and monetary measures to cure inflation has not tamed prices but cast side effects on growth.
The government will announce the factory output growth figures for August on Wednesday and release wholesale prices based inflation data for September two days later.
With India's inflation rate racing towards worrisome double-digit levels, all eyes are on the RBI, on whether it may announce a pause in its interest rates hike cycle later this month when it presents the quarterly monetary policy review on October 25.