India likely to retain 4% inflation target for central bank, Bloomberg News reports

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

The flexible inflation targeting in India mandates a 4% headline inflation target within a tolerance band of 2% to 6%.

The RBI’s target is set every five years and is due 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 time following feedback from stakeholders who backed the framework.

Read more: India’s inflation rises from record low, but economists see scope for another rate cut

India adopted the inflation-targeting framework and formally tasked the central bank with it in 2016. It was last renewed in 2021.

Over the past decade, inflation has stayed within the mandated band for roughly three-quarters of the time, with volatility peaking during the pandemic years.

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