Economics
India Central Bank Favors Retaining Inflation Target Regime
- RBI has mandate to keep inflation within a band of 2%-6%
- Inflation above 6% in 2020 forced RBI to pause rate cuts
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The Reserve Bank of India said Friday that its current inflation targeting regime is effective at containing price-growth and that it recommends the government renew it for another five years.
The central bank’s recommendation on flexible inflation targeting, known as FIT, comes after a run of consumer prices above its expected range raised speculation that the government of Prime Minister Narendra Modi would order up a new mechanism to replace the one put in place in 2016. Modi’s administration will likely make a final decision this year.