The Reserve Bank of India (RBI) said on Friday it is in favour of retaining the existing inflation target set in 2016 for the next five years, ahead of an upcoming government review. The six-member monetary policy committee (MPC) headed by the RBI governor decides on policy rates keeping this target in mind. Finance minister Nirmala Sitharaman recently said the government will review the target band as the term of the MPC ends on 31 March. The RBI report also suggested changes in the inflation targeting framework for better transparency, accountability and operational efficiency. This includes modifying the definition of failure from the current three consecutive quarters norm of inflation remaining outside the tolerance band, to four consecutive quarters.

Source: Mint February 26, 2021 19:03 UTC