India directs Reserve Bank of India to target retail inflation at 4% until March 2031
Extends the RBI's five-year inflation-targeting mandate for another term and fixes its policy horizon through 2031.
Change
India notified the Reserve Bank of India to target annual retail inflation at 4% with a ±2 percentage-point tolerance (2–6%) effective April 1, 2026 through March 31, 2031.
Why it matters
The Reserve Bank of India’s Monetary Policy Committee must align interest-rate settings and public guidance to keep headline retail inflation inside the notified 2–6% band. This requirement narrows the committee’s discretion to loosen monetary policy if such moves risk breaching the upper tolerance during the five-year target period.
Implications
- — Reserve Bank of India Monetary Policy Committee must calibrate the policy interest rate and public communications to achieve headline retail inflation within the 2–6% band during April 1, 2026–March 31, 2031.
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