New Delhi, 21 August (Kiran News). The Reserve Bank of India (RBI) has invited public opinion on whether the retail inflation target of four percent should remain unchanged for monetary policy or if new benchmarks are needed in light of changing global and domestic scenarios. The RBI has sought suggestions from various stakeholders by 18 September 2025.
On Thursday, the RBI released a discussion paper, asking for feedback on four key questions. The main question is whether the guidance for monetary policy should be based on core inflation or gross inflation. The RBI also wants to know if the four percent target is still suitable for balancing growth and stability.
Additionally, the central bank has sought public views on whether the acceptable two percent deviation around the target should be modified, or if only a single range without a fixed target should be adopted. The discussion paper states, “The experience so far has been broadly positive.”
The RBI’s Monetary Policy Committee (MPC) determines its monetary policy primarily based on retail inflation data. India adopted the flexible inflation targeting system in 2016 after an agreement between the government and the RBI. Under this framework, the Consumer Price Index (CPI)-based retail inflation target was set at four percent, with a two percent band on either side. This arrangement is valid until 2026.
The RBI’s statement mentioned that, over the past nine years, the inflation rate has stayed within the target for the first three and the most recent three years. However, during the intervening years, shocks like the COVID-19 pandemic and the Russia-Ukraine war pushed inflation rates close to the upper limit. The RBI’s inflation targeting system completes 35 years this year. It was first adopted by New Zealand in 1990 and has since become the most widely accepted monetary policy framework globally.
My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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