Flexible Inflation Targeting Framework Review

  • In March 2026, the Union Ministry of Finance officially notified the continuation of the current inflation target for the 2026–2031 periods following a statutory review.
  • The Central Government determines the inflation target every five years in consultation with the Reserve Bank.
  • The current framework maintains the Consumer Price Index (Combined) target at 4% with a ±2% tolerance band.
  • This symmetric band allows for short-term economic fluctuations while ensuring long-term price stability and investment growth.
  • Inflation anchoring is critical for maintaining household purchasing power and providing a stable environment for businesses.

Institutional Mechanism and Accountability

  • The Monetary Policy Committee (MPC) is the statutory body empowered ....
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