No one doubts that central bankers are the most conservative lot. Reserve Bank of India under Raghuram Rajan has gone a step ahead in being so much extra-cautious that it keeps doubting everything under the sun to delay the much-needed rate cut.
The Reserve Bank of India (RBI) has been hawkish on policy rates for the past four years to contain inflation. The central bank has maintained tight monetary policy despite reservations from the elected representatives and the government. What's worse, the hawkish stance had little perceptible impact on the price rise, as the inflation remained stubbornly high.
Ever since Raghuram Rajan has taken reins at the Reserve Bank of India, media wasted no opportunity to hail him as a hero (an economist with rock star appeal, to be precise) and a vociferous inflation warrior. Indeed, Rajan has hiked rates three times between September 2013 and January 2014 by 25 bps each to take the inflation bull by the horn.