Regulator Reserve Bank of India has proved itself amongst the most aggresive of all regulators in taking control steps against towering inflation figures. This the bank has proved by yet another policy rate hike today by as much as 50 bps for both repo as well as reverse repo rates.

This policy rate hike ranks the 11th of its kind announced by the apex bank since March 2010.

The market has been taken by surprise by this aggresive and unexpected step by the regulator. Analysts had expected a maximum rise of 25 bps to be announced.

"Considering the the overall growth and inflation scenario there is a need to persevere with the anti-inflationary stance. The cumulative impact of monetary action on demand will be reinforced," RBI Governor D Subbarao said.

"The challenge for the Government and the Reserve Bank is to ensure that demand is constrained in the short term to bring inflation down, but to encourage supply response so as to expand the potential output of the economy in the medium term," he said.