Reviewing the policy responses of the Reserve
Bank of India over the past few years, it is argued that in recent times
the RBI has sent mixed signals to the market. On the one hand a
reduction of the marginal standing facility rate made funds cheaper for
banks, but on the other, two successive hikes in the repo rate suggest a
tightening of monetary policy. If the RBI's current approach to the
twin challenges of reining in inflation and stimulating growth
continues, the market will remain on tenterhooks
