DESPITE 6 STRAIGHT HIKES...No rate pause in sight, bond yields harden

Traders of government bonds were not surprised when the announced a sixth consecutive increase in the repo rate on Wednesday. What did dampen the market's spirits, however, was the lack of a concrete sign from the central bank that it would pause rate hikes going ahead. The RBI's Monetary Policy Committee raised the repo rate by 25 basis points to a four-year high of 6.5 per cent on Wednesday.

- BHASKAR DUTTA

The size of the rate hike was the smallest in the RBI's current rate-hike cycle, which began in May 2022.

While the slower pace of rate hikes does show the RBI's acknowledgement of inflation having eased back into its tolerance band of 2-6 per cent, the central bank's language on Wednesday showed that it was not taking its foot off the pedal as far as inflation was concerned, particularly core inflation.