The RBI has raised the repo rate by 25 basis points to 5.5% and shifted its stance to "calibrated tightening." This unanimous decision, the first hike since February 2023, aims to curb inflation amidst robust economic growth. India's GDP grew 7.8% in Q1, leading to an updated full-year forecast of 7.1%. However, inflation is a concern, exacerbated by global crude prices, deficient monsoons, and El Niño, with retail inflation expected to hit 6% by December. The author views this proactive measure to dampen demand and prevent broad-based inflation as timely and welcome, signaling a rate hike cycle.