India retains RBI’s retail inflation target band

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Reserve Bank of India (RBI).

New Delhi, (Asian independent) India has retained the Reserve Bank’s retail inflation target band of 2-6 per cent under the ‘Flexible Inflation Targeting’ framework.

The target for retail inflation has been retained at 4 per cent with a margin of 2 per cent on either side for the period of 2021-26.

Economic Affairs Secretary Tarun Bajaj said that the inflation target for 2021-2026 period has been retained.

The FIT framework was adopted in 2016 and was supposed to have expired on March 31.

At present, the RBI has a target for retail inflation or CPI of 4 per cent with a margin of 2 per cent on either side.

The CPI target is used by the RBI’s Monetary Policy Commitee (MPC) to set key lending rates so as to keep inflation in check.

Last month, the RBI had recommended to retain the inflation band.

Presently, the retail inflation is above the Reserve Bank’s 4 per cent target for the past eight months.

India’s CPI had rose to 5 per cent YoY in February from 4.1 per cent in January.