The Centre has directed the Reserve Bank of India (RBI) to retain the inflation target of 4% with a tolerance of 2% on either side for another five-year period ending March 2026.
Earlier in 2016, the government had allowed RBI to keep the consumer price index (CPI) inflation target at 4% with upper and lower tolerance of 2% for a five-year period ending March 31, 2021.
As per a PTI report, the Economic Affairs Secretary Tarun Bajaj on Wednesday said, 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.
Between October 2016-March 2020, the central bank has managed to hold the consumer price index at an average of 3.9%.
RBI's monetary policy decisions are with the objective of achieving the medium-term target for CPI inflation of 4% within a band of +/- 2%, while supporting growth.
In February 2021 policy, RBI lowered the CPI inflation target for the fourth quarter of FY21 and the remaining FY22. The central bank revised CPI inflation to 5.2% in Q4:2020-21, 5.2% to 5.0% in H1:2021-22 and 4.3% in Q3: 2021-22, with risks, broadly balanced.
CPI Inflation stood at 5.03% in February 2021.
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