REGULATORY · MARKET STRUCTURE · INDIA
Government directs RBI to target 4% retail inflation
Change
Government instructs RBI to target 4% retail inflation (±2%) until March 31, 2031.
Why it matters
The government has formally set the CPI inflation objective at 4% with a 2-percentage-point tolerance band for April 1, 2026–March 31, 2031. This notifies and binds the RBI's monetary policy framework, constraining the MPC to calibrate policy rates to keep inflation between 2% and 6%. The change reduces the RBI's room to prioritize non-inflation objectives when inflation approaches the band limits.
Implications · Who is affected · What to watch
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Regulatory & Compliance Policy & Regulation Business & Markets Economy Banking Regulation Finance & Banking Monetary Policy