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RBI Eyes Cooling Inflation as It Defends Targeting Framework

  • Government wants to relax inflation target to help growth
  • Economists says food, fuel prices make headline CPI volatile
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Photographer: Dhiraj Singh/Bloomberg
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Inflation in India may finally be slowing, opening the door for the central bank to resume monetary easing and helping it push back against calls for a shake up of its policy framework.

Consumer price index figures due Tuesday are expected to show a 5% increase in December from a year earlier, returning to the Reserve Bank of India’s target range of 2% to 6%. Prices rose quicker than 6% in 11 of the 12 prior readings, hampering the RBI’s ability to counter the pandemic-driven downturn.