India likely to retain 4% inflation goal for RBI, report says

India is likely to retain the existing inflation target for the RBI, with the current framework viewed as effective in managing prices, Bloomberg News reported on Monday, citing finance ministry officials familiar with the matter.

India’s flexible inflation-targeting framework mandates a 4% headline inflation target, with a tolerance band of 2% to 6%.

The target, overseen by the Reserve Bank of India, is set every five years and is due for review in March.

The Ministry of Finance did not immediately respond to a Reuters request for comment.

In September, Reuters reported that the RBI was expected to recommend retaining the existing inflation target for a third consecutive term, following feedback from stakeholders who supported the framework.

India adopted the inflation-targeting framework in 2016, formally tasking the central bank with maintaining price stability. The framework was last renewed in 2021.

Over the past decade, inflation has remained within the mandated band for roughly three-quarters of the time, although volatility increased during the pandemic years.

India’s retail inflation rose in November from a record low in the previous month but remained below the central bank’s target range for the third consecutive month.