Archive · 19 Sep 2025
RBI Likely to Retain Current Inflation Framework
The Reserve Bank of India (RBI) is deciding if it will keep its current system for controlling inflation.
The system aims to keep prices stable at 4% inflation, with a wiggle room of 2-6%.
Experts and market participants were asked for their thoughts.
Most agree the current method works well, and want to keep it.
This helps keep prices in check and builds confidence in the economy.
Although, the weight of food prices in the consumer price index may be revised next year to reduce volatility.
RBI is expected to recommend retaining the current inflation target.
The current framework targets 4% inflation with a 2-6% tolerance band.
The RBI sought feedback from various stakeholders.
Most respondents support the continuation of the current structure.
The consumer price index basket is due for review next year.
- Who
- RBI and stakeholders
- What
- Are reviewing the inflation targeting framework
- When
- Feedback sought before March 2026
- Where
- India
- Why
- To determine if the current framework should be renewed.
Advocates of Headline Inflation Targeting
Advocates of Core Inflation Targeting
Inflation Measure
Advocates of Headline Inflation Targeting
Headline inflation should be the main target; food and fuel are significant.
Advocates of Core Inflation Targeting
Suggests giving more weight to core inflation excluding volatile food and fuel prices.
- Framework Implementation
- 2016
- Inflation Target
- 4%
- Tolerance Band
- 2-6%
- Review Deadline
- March 2026
- Headline CPI Targeting
- Supported by most stakeholders
