Archive · 13 Sep 2025
RBI Inflation Targets: Status Quo Favored by Former MPC Members
The RBI is reviewing its plan to keep prices stable, currently aiming for 4% inflation with a 2-6% range.
Some experts who used to make these rules want to stick with the plan, believing it's helped keep prices under control.
Others suggest it should be changed to make it more suited for the growth in India.
The RBI will make a final decision by March 2026, to help the economy.
Former MPC members largely favor retaining the existing 4% CPI inflation target.
The RBI is seeking comments on its monetary policy framework, with a deadline of September 18.
The 4% inflation target was officially adopted in August 2016 and is reviewed every five years.
Some suggest reducing the tolerance band, others think it would be premature.
Some argue that changing the target or band could risk the RBI's credibility.
- Who
- Former and current members of the Monetary Policy Committee (MPC) and the Reserve Bank of India (RBI)
- What
- Discussions on the future of India's inflation targets, including the 4% CPI inflation target and tolerance band.
- When
- The RBI is seeking comments on its monetary policy framework, with a deadline of September 18 and review by the end of March 2026.
- Where
- India
- Why
- To determine the optimal inflation target and band for India's monetary policy framework.
Maintain Current Targets
Adjust Inflation Targets
Optimal Inflation Rate
Maintain Current Targets
Maintaining the 4% inflation target is crucial for stabilizing expectations.
Adjust Inflation Targets
An inflation target of approximately 5.5% would be more appropriate for India's development.
Tolerance Band
Maintain Current Targets
Changes would be premature and risk the credibility of the FIT.
Adjust Inflation Targets
Reducing the tolerance band to 3.5% with a 2-5.5% range would be better.
- Inflation Target
- 4% CPI inflation
- Tolerance Band
- 2-6%
- Review Deadline
- End of March 2026
- RBI Focus (since Jan 2014)
- Retail inflation
