After nearly four years without a hike, the central bank raised the policy repurchase rate to 5.50% and adopted a calibrated tightening stance. Governor Sanjay Malhotra called that a "milder form" of a rate-hike cycle. At his post-meeting remarks in Mumbai, he added he doesn't expect liquidity to stay heavily in surplus "for a very long period of time." The RBI has been pulling cash out of the system after a recent program to bring in foreign-currency deposits from Indians overseas delivered bigger-than-expected inflows, flooding banks with funds and risking faster inflation. Traders had bet on stronger liquidity-withdrawal measures, so the modest hike and softer tone underwhelmed. The rupee fell up to 0.4% to 96.
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