MUMBAI: The Reserve Bank has come out with a discussion paper on the forthcoming review of its flexible inflation targeting (FIT) framework, scheduled for next March, seeking to examine the past nine years of inflation targeting experience, considering global experiences and emerging economic risks.
The central bank has invited comments from the public and all other stakeholders by September 18, 2025 for the review, which is mandated by law.
The flexible inflation targeting framework currently mandates the RBI-led Monetary Policy Committee to keep consumer prices-based inflation under check at 4% with a 2% margin either way.
The framework was given statutory backing in May 2016 through amendments to the RBI Act, 1934. Under this, if the RBI misses the target for three consecutive quarters, the governor who chairs the MPC has to write to the government explaining the reasons for the misses and, if deemed necessary, will also have to appear before the relevant Parliamentary panel.
It missed the target only once during the pandemic, and the then governor Shaktikanta Das had to write to the government but did not appear before the Parliamentary panel.
According to the amended Section 45ZA, the government, in consultation with the RBI, is required to set a retail inflation target every five years. The target, first notified in August 2016 for 2016–21, was retained in March 2021 till March 2026.