The RBI has raised the repo rate by 25 basis points to 5.50% and shifted from ‘neutral’ to ‘calibrated tightening’. But what does that stance mean, and how much tighter will monetary policy actually become?

In this episode of Tracking Trends, Rajesh Mahapatra speaks with Kalyan Ram, BasisPoint Insight's founder, to unpack the policy decision and Governor Sanjay Malhotra’s explanation of the RBI’s approach.

At the heart of the conversation is an important distinction: the RBI is presenting its stance as forward guidance, rather than an automatic shift to tighter liquidity conditions. Kalyan examines what that clarification means and why currency markets appeared to want a more decisive policy signal. Was the rupee’s fall a verdict on the size of the hike, or on the message accompanying it?

The discussion also explores why bond markets were more comfortable with the outcome, the decision not to raise the cash reserve ratio, and how the festive season could influence the pace at which higher rates feed through to borrowing costs. With the RBI confident about growth but projecting inflation above its 4% target even next financial year, how much further might interest rates rise?