In a recent report on currency and finance (RCF) for the year 2020-21, the Reserve Bank of India said "the current numerical framework for defining price stability, i.e., an inflation target of 4 per cent with a +/-2 per cent tolerance band, is appropriate for the next five years”.
Context
In a recent report on currency and finance (RCF) for the year 2020-21, the Reserve Bank of India said "the current numerical framework for defining price stability, i.e., an inflation target of 4 per cent with a +/-2 per cent tolerance band, is appropriate for the next five years”.
Background
Monetary Policy
Instruments of Monetary Policy Several direct and indirect instruments are used for implementing monetary policy:
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Analysis
Understanding India’s Monetary Policy framework
A brief history of monetary policy framework in India
Thus, it is evident that India’s monetary policy framework is a continuously evolving process contingent upon the-
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Monetary Policy Committee
Why is there a debate around the Flexible Inflation Targeting (FIT) regime?
Benefits of Inflation Targeting
Challenges in Inflation targeting:
Conclusion
The need of the hour is an effective fiscal and monetary interface with responsible and functional autonomy to the RBI. In these challenging times, the need is to tinker not with inflation targeting, but to allow the RBI autonomy with less fiscal dominance.
Verifying, please be patient.