RBI's dovish inflation call raises eyebrows as price pressures build

India is beginning to diverge from many other major global central banks, which now see price pressures as more entrenched and in need of action

Economists are challenging the relaxed view on inflation by India’s central bank, which surprised markets Thursday when it opted to avoid any major signs of normalization and kept policy tilted toward growth.

Citigroup Inc. and Standard Chartered Plc were among those calling out the projections as too dovish as fuel prices surge, cost pressures mount and demand rebuilds from the pandemic. Bond markets, which were expecting some signs of tightening, rallied after the Reserve Bank of India’s decision.

“RBI’s defense that it is not behind the curve comes from their own rigorous analysis and forecast on the likely inflation trajectory ahead,” said