The Reserve Bank of India surprised the markets with a 50bp hike to the repo rate to 7.25% today, whereas both we and the consensus had expected 25bp. The accompanying annual Monetary Policy Statement has prompted us to revise up our forecast for the repo rate to 8.0% by December, compared to 7.5% previously. However, this would still be less than currently priced into the markets and a more aggressive stance now may reduce the need for larger increases further down the line.