Graphics: Yogesh Kumar / Mint

The pace of recovery also continued to be strong in China where the HSBC Manufacturing PMI for December was at its highest since the survey began in 2004, indicating the strength of the rebound there. The worrying news, however, is that output prices in Chinese manufacturing too have risen at the fastest pace in 17 months.

In India, the rebound in demand so far has not resulted in serious levels of output price inflation, with most of the price rise confined to input prices. But with the PMI numbers showing that demand continues to expand rapidly, the central bank will have to start thinking of withdrawing liquidity, which continues to be abundant—on Monday, the amount parked in reverse repos amounted to a huge Rs83,575 crore.

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