Inflation Target Framework
CEA bats for no change to inflation target framework
This story was originally published at 17:29 IST on 29 October 2025
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--CEA on CPI aim framework review: Change can be suboptimal
MUMBAI – The Chief Economic Adviser to the Government V. Anantha Nageswaran is in the favour of not making any change to the inflation targetting framework, which is currently under review. "Sometimes changing could be more suboptimal than letting it continue in the same manner," Nageswaran said while responding to a question on the review of the monetary policy framework.
Under the monetary policy framework, the government has set a 4% CPI inflation target for the Reserve Bank of India with a tolerance band of 2% to 6%. The monetary policy framework was introduced in 2016 with the implementation of the flexible inflation targeting framework. In the first review conducted in March 2021, the government and the RBI retained the inflation target and range for a period of five years, ending in March 2026.
"People are used to a particular pattern and as long as in the operational details, if the policy makers are creative and flexible enough, the framework need not be a millstone round their neck," Nageswaran said at Business Standard's BFSI Insight Summit. "I think that is the best we can hope for, rather than looking to disrupt the framework itself, which is relatively young in its life."
The RBI had sought views from stakeholders on the framework last month. The RBI and the government are expected to conclude the review exercise by Mar. 31. End
Reported by Krity Ambey and Sagar Sen
Edited by Akul Nishant Akhoury
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