New Delhi, Aug. 6 -- The Reserve Bank of India (RBI) did exactly what almost every RBI watcher expected this week. It left the repo rate unchanged. The decision was unanimous. By the time the announcement arrived, financial markets had already moved on to the RBI governor's explanation.

That reasoning was what gave economists something to get their teeth into. Inflation has been edging up for five consecutive months and remained above RBI's 4% target since June. Yet, the Monetary Policy Committee (MPC) sounded more dovish about the outlook than many economists had expected.

The immediate reason is easy enough to identify. Consumer price inflation during the first quarter of 2026-27 came in below RBI's own forecast. Core inflation is sub...