GOI may recommend a looser inflation target for RBI
Published On: Wednesday, December 9, 2020 | By: Team KnowMyStock
GOI is considering recommending a looser inflation target for RBI, allowing it to focus more on economic growth despite price pressures, according to some sources. A consumer-price inflation band tracked by the Reserve Bank of India may be relaxed further from the current 2%-6% range. The government still needs to hold consultations with the central bank before finalizing a new framework sometime next year. The current mandate, set in 2016, requires the RBI to keep headline inflation at the 4% midpoint of its target range. The Finance Ministry is of the view that the RBI can’t be saddled with a rigid inflation targeting framework, especially in situations when growth needs to be pushed, as per the sources.
RBI Governor Shaktikanta Das said that a final call on what measure to target rests with the government and the Parliament, although he doesn’t see a situation where they will move away from tracking the CPI.
Tags: Inflation rate RBI economic growth
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