Policy divergence sharpened this week as central banks pulled in different directions on inflation, liquidity, and geopolitical risk.
In India, researchers highlighted the RBI's shift to calibrated tightening with a 25bp hike to 5.50%, with officials signalling cuts are off the table and the next move is a pause or further hike. CPI is projected to peak near 5.9% in Q3 FY27, even as Q1 GDP surprised at 7.8%.
In the euro area, published analysis flagged repo rates drifting toward the deposit facility rate as excess liquidity drains, with ECB voices arguing policymakers should tolerate more money-market volatility rather than smooth every move. A new standing repo line for non-euro central banks goes live in Q4. Consumer inflation expectations ticked up to 3.1%, with Middle East energy pressures cited.
Sweden's Riksbank is weighing faster normalisation amid a weaker krona and energy-driven inflation risk. In Japan, researchers noted BOJ hikes have lifted the call rate toward 1.25%, while flagging AI-investment profitability doubts as a global stability risk.