Inflation Targeting

Recently, the Reserve Bank sought public feedback on whether its monetary policy should continue to target 4 per cent retail inflation or set new parameters to boost growth while maintaining stability in the fast-growing large economy.

• While emphasising that the flexible inflation targeting (FIT) regime has been successful, the central bank is also looking at whether core inflation would be the best guide for monetary policy.
• Inflation targeting may be defined as a framework for policy decisions in which the central bank makes an explicit commitment to conduct policy to meet a publicly announced numerical inflation target within a particular time frame. ....