Alternatively, the Bank may opt to increase the repo rate on the expectation that other interest rates would rise as the cost of potential commercial bank funding from the Central Bank goes up. But in both circumstances, if financial institutions have a lot of excess funds on their hands, then interest rates may not rise at all!
The point is that the Central Bank has to be consistently monitoring the markets and gauging reactions for indirect instruments to be successful. At times, moral suasion has to be employed—telling financial institutions how they are expected to behave—to reinforce the signaling effect of an action.