The Central government is likely to give an unchanged inflation target of 4 (+/-2) percent to the Reserve Bank of India’s Monetary Policy Committee, for the next five years starting 2021-22, Money control has learnt.
The amendments made to the Reserve Bank of India Act in 2016 allows the government to set the inflation target, in consultation with RBI, once in every five years.
“The inflation target is likely to remain unchanged. While core inflation remains a concern, it is offset by low food inflation. Our forecast for 2021-22 is that headline retail inflation will stay below 6 percent,” said a top government official. The inflation targeting framework for the next five years is expected to be announced any day now.
It is learnt that the RBI and the finance ministry are on the same page regarding keeping the targets unchanged. In fact, in late February, the RBI said in a report that it favours keeping the current inflation targeting regime unchanged, saying it has been effective in containing price-growth.