Welcome review

Change in inflation target must be based on solid evidence

The Reserve Bank of India (RBI) has started an internal review of the monetary policy framework and will hold a roundtable with experts later this year. The RBI Act was amended through the Finance Act, 2016, which brought in the current monetary policy framework. It provided the institutional framework for the monetary policy committee (MPC) to maintain price stability, while keeping the objective of growth in mind. The government, in consultation with the central bank, notified the inflation target of 4 per cent with a band of 2 per cent on either side in August 2016. The target will be