There was some confusion in financial markets about how the MPC would interpret the inflation mandate given to it by the government. It said that the inflation target for 2016-17 and all subsequent years shall be 4%, with a band of +/- 2%. In an open economy, the domestic inflation rate also has to be sensitive to the global inflation rate. RBI Governor Shaktikanta Das has also signalled that the inflation mandate will continue to be interpreted as before. The real debate that should begin soon is whether the current inflation mandate should continue after 2021 or whether there is a case for a fresh look.

Source: Mint July 23, 2019 18:11 UTC