While the announcement made by the central bank i. e. the Reserve Bank of India was surely one of the announcements that were expected by the market experts and economists but as the reverse repo rate was hiked by 50 bps, the industry watchers are of a view that it was 25 bps more than what was initially expected by the markets.

For the record, RBI has recently announced a hike of close to 25 bps in the repo rates and close to 50 bps in the reverse repo rates.

Moreover, the repo rates are currently standing at a level of 6% while the reverse repo rates are standing at a level of close to 5%.

However, it is believed that factors like Europe's resilience, inflation and interest rates are the three factors that have triggered the decision of RBI to announce a hike which was going against the expectations of the markets.

In fact, it is to be mentioned here that as the central bank wants to reduce the gap between the repo and the reverse repo rates and hence the decision to hike reverse repo rates makes sense. The aim to, eventually strengthen the transmission of monetary policy.