What if the Reserve Bank of India hikes rates off-cycle?
An off-cycle RBI hike to defend the rupee jolts Indian bonds and signals broader EM tightening: the read is higher reals, a firmer dollar and pressure on rate-sensitive risk as EM scrambles to defend FX. Rhymes with the 2013 emergency RBI tightening under Rajan that stabilized INR but spiked local yields. India imports oil and funds via portfolio flows; a defensive hike protects the currency at the cost of growth. Forward: with inflation contained, the surprise is the signal, amplifying the EM-wide tightening read.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. An unscheduled RBI rate hike to halt rupee depreciation jolts Indian bonds and signals broader EM tightening pressure. The trigger decomposes into signed root‑shocks — Fed policy path ▲ · Inflation surprise ▲ — which propagate through our causal graph to the markets below.