New Delhi, July 7 -- The role of a central bank has become a subject of intense scholarship and research in core economic studies as well as financial economics. The ability of central banks to move financial markets, while keeping a steady hand on the tiller of the economy, has made it a pivotal institution that has the attention of traders, bankers, analysts, scholars and industry.

Different central banks have different mandates-with employment, GDP growth, inflation management and systemic stability being common-but what has earned them credibility over the past five decades is their reputation for objective and even-handed economic management.

The Reserve Bank of India (RBI), for example, is expected to keep inflation within managea...