, Columnist
Is Inflation Targeting Due for a Makeover?
India’s dilemma show how post-Covid central banking is groping toward a new normal.
Add a dial for growth.
Photographer: Carl De Souza/AFP/Getty
This article is for subscribers only.
“Did inflation targeting kill India’s growth story?” asks the headline of a recent article in the Mint newspaper.
The idea of making an explicit numerical inflation goal the central bank’s primary objective came late to India. It was only in 2016 that the Reserve Bank formally took responsibility for keeping the rate of price change between 2% and 6% for five years. The clock runs out next March, but already some analysts are attacking the mechanism as anti-growth and in need of an overhaul.