RBI's Dovish Move Divides Economists: Goldilocks or Overreach?

• RBI cut the repo rate by 25 basis points to 5.25% and maintained a neutral stance, aiming to support growth amid controlled inflation.
• The central bank announced ₹1 lakh crore in OMO purchases and a $5 billion dollar-rupee swap to enhance liquidity.
• Economists are divided on the RBI's dovish messaging, with some seeing it as a "Goldilocks period" and others warning of potential overreach and financial stability risks.
• Bond markets showed a muted reaction, with yields remaining largely flat despite the rate cut and OMO announcement.
• Concerns were raised about potential rupee depreciation due to lower rates and aggressive liquidity support, despite the FX swap providing intervention room.

Why It Matters: RBI's dovish policy sparks debate on economic stability and currency.