According to Leif Eskesen of HSBC RBI should tighten monetary policy into this year because inflation is too high and there is a need for a more decisive monetary policy response, if inflation has to be controlled.
Banks depend on the repo window for their liquidity requirements and since borrowings under repo are capped, banks have to go to the MSF for additional fund requirements.
The US jobs data was better and the US bond yields too softened by about 5 basis points. There is a possibility that the Fed will talk in dovish tones in the upcoming Fed meeting and some of the recent damage might get unwound. Markets could see a temporary rally said CNBC-TV18's, managing editor, Udayan Mukherjee.