RBI monetary policy review: Direction for repo rate is clearly northwards

The monetary policy announced by the RBI on Wednesday was to throw a different kind of surprise. It was not a case of whether the Monetary Policy Committee (MPC) would raise the repo rate but by how much. The estimates varied from 25 bps to 75 bps with the forecasts based on what the market felt would be the terminal point of the repo rate this year. The MPC pitched for a high number of 50 bps, which is significant because if combined with the inflation forecast, it indicates that more hikes are coming.