NEW DELHI: The Reserve Bank (RBI) should not be overly concerned about retail inflation target of 4 per cent as the targeting may lead to decline in output, affecting growth, SBI's chief economist said today. "RBI should not be overly concerned about CPI inflation to be at 4 per cent. It there is an inflation targeting then there is a decline in output (over the period of time)," he said. He also cited empirical evidence suggesting that inflation targeting countries, which tend to disinflate rapidly in the initial years, tend to witness a decline in output that affects growth. Ghosh said if the government and the RBI move towards the 4 per cent inflation by January 2018, as suggested earlier, it will leave limited room for rate cut in forthcoming policies.

Source: Economic Times October 06, 2017 16:18 UTC