RBI's inflation forecasts miss the mark, spark criticism
The Reserve Bank of India (RBI) is catching heat for its off-target inflation predictions this year, which have influenced key policy moves.
Their early 2025 forecast was off by 0.7% points—the biggest miss in six years.
Now, most economists think inflation will land closer to 2-2.2%, not the 2.6% RBI predicted for next March.
Food prices shake things up; possible rate cut ahead
A big reason for the forecasting slip? Food prices dropped sharply thanks to strong harvests and smooth supply chains—food makes up nearly half of what goes into calculating inflation.
Even with these changes, RBI Governor Sanjay Malhotra has kept interest rates steady and cautious and has stated they are updating their forecasting model to improve accuracy.
With all this in mind, some experts expect a rate cut could be on the table when RBI meets again in December.