RBI Inflation Forecasts Under Fire: Economists Warn of Overly Hawkish Policy Amid Persistent Misses

Overview

Economists are increasingly scrutinizing the Reserve Bank of India's inflation forecasting model, which has consistently overestimated price pressures throughout the year. These persistent misses have led to a more hawkish monetary policy stance than perhaps necessary, potentially delaying interest rate cuts. A significant drop in food prices, driven by strong harvests and improved supply chains, is identified as a primary reason for the forecasting errors.