Quantum, timing of RBI rate hike has surprised the markets: Analysts

RBI announcement saw the markets tumble, with the S&P BSE Sensex slipping over 1,100 points in intraday deals to around 55,800 levels.

The out-of-turn hike in repo rate by 40 basis points (bps) to 4.4 per cent with immediate effect and a 50-bps hike in the cash reserve ratio to 4.5 per cent by the Reserve Bank of India (RBI) on Wednesday took the markets by surprise, said analysts, who expected the central bank to hike rates only in June.

“The hike in rates, although expected, was only likely to come through in the June policy review. The quantum of hike (40 bps) in this out-of-turn announcement was also a surprise as the markets expected the RBI to hike by 25 bps. The