Flexible inflation targeting: Fix the underlying first - it is broken

The RBI must push the government to put the periodical rebasing of the CPI into the inflation targeting agreement

British economist Friedrich August von Hayek once said: “I do not think it is an exaggeration to say history is largely a history of inflation.” So, any study on inflation and that too by one of the deputy governors of the Reserve Bank of India (RBI) and a Monetary Policy Committee (MPC) member is bound to make people sit up and take notice. And especially at a time when there is an impending review the monetary policy framework and the target band. The RBI paper avers that trend inflation has fallen and the monetary policy target inflation level is consistent