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Wednesday, April 14, 2021

Inflation target retained at 4% with margin of +/-2% till March 2026

As a result of inflation targetting mandate, the RBI has been able to keep consumer price index averaging 3.9 per cent during October 2016-March 2020.

By: ENS Economic Bureau | Mumbai |
April 1, 2021 3:15:02 am
The RBI last month said the existing regime is effective and recommended that the band be retained.

The government on Wednesday asked the Reserve Bank (RBI) to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for another five-year period ending March 2026.

To control the price rise, the Centre in 2016 gave a mandate to the RBI to keep the retail inflation at 4 per cent with a margin of 2 per cent on either side for a five-year period ending March 31, 2021. “The inflation target for the period April 1, 2021 to March 31, 2026 under the Reserve Bank of India Act 1934 has been kept at the same level as was for previous 5 years,” said Tarun Bajaj, Secretary, Department of Economic Affairs.

As a result of inflation targetting mandate, the RBI has been able to keep consumer price index averaging 3.9 per cent during October 2016-March 2020.

The six-member MPC, which had its first meeting in October 2016, was given the mandate to maintain annual inflation at 4 per cent until March 31, 2021.

The RBI last month said the existing regime is effective and recommended that the band be retained. It suggested some aspects of the framework be reviewed, including the time horizon for the bank to meet the target and the process of admitting members to the Monetary Policy Committee.

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