India's inflation target band appropriate for next 5 years: RBI report

Published on Feb 26, 2021 02:25 PM IST

"Trend inflation to which actual inflation converges after a shock provides an appropriate benchmark for the inflation target; trend inflation has fallen from above 9% before FIT to a range of 3.8%-4.3% during FIT," the RBI said in its release.

India adopted the flexible inflation targeting framework in 2016 and the government is due to review the same in the near future.(MINT_PRINT)
India adopted the flexible inflation targeting framework in 2016 and the government is due to review the same in the near future.(MINT_PRINT)
Reuters | | Posted by Prashasti Singh

India's medium-term inflation target of 4% is appropriate for the country under its the central bank's flexible inflation targeting (FIT) mandate, an internal report from the Reserve Bank of India said on Friday.

"Trend inflation to which actual inflation converges after a shock provides an appropriate benchmark for the inflation target; trend inflation has fallen from above 9% before FIT to a range of 3.8%-4.3% during FIT," the RBI said in its release.

India adopted the flexible inflation targeting framework in 2016 and the government is due to review the same in the near future.

"The current numerical framework for defining price stability, i.e., an inflation target of 4% with a +/-2% tolerance band, is appropriate for the next five years," RBI said.

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