NEW DELHI: A continued dovish stance by the Reserve Bank of India (RBI) risks the central bank falling behind the curve. The RBI's decision to retain the status quo continues to stun market players, according to Axis Mutual Fund.
The RBI's action today stands out in an environment where global central bankers are rushing to raise interest rates across much of the developed world and a few emerging markets. In light of global risks, we believe that maintaining a dovish stance risks the RBI falling behind the curve," the report concluded.
Some experts believe the inflation forecasts are overly optimistic. The RBI surprised the market by maintaining its "accommodative stance" and not raising the reverse repo rate, which was widely expected, according to Venkatraman Venkateswaran, Group President and CFO of Federal Bank.
"They've taken a cautious approach and pledged to help the economy recover." The inflation estimates appear optimistic given the growing oil prices and supply side restrictions", he remarked.
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