RBI gets formal inflation target

Raghuran Rajan, Reserve Bank of India

The Reserve Bank of India (RBI) has agreed a new monetary policy framework with the government that will hand the central bank an inflation target of 4% from fiscal year 2017 onwards.

The agreement, signed on February 20 but published today, completes the shift towards inflation targeting envisaged by the Patel Committee established by RBI governor Raghuram Rajan in September 2013.

"It is essential to have a modern monetary policy framework to meet the challenge of an increasingly complex

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