RBI Chief Highlights Success of Flexible Inflation Targeting Framework

Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the effectiveness of the Flexible Inflation Targeting (FIT) framework in stabilizing India's economy. Speaking at a press conference, he noted that the framework, introduced in 2016, has significantly reduced average inflation and align...

Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the effectiveness of the Flexible Inflation Targeting (FIT) framework in stabilizing India's economy. Speaking at a press conference, he noted that the framework, introduced in 2016, has significantly reduced average inflation and aligned it with the target Consumer Price Index (CPI) of 4% ± 2% tolerance band. He highlighted the following key points: Framework's Success: The FIT framework has helped maintain price stability while supporting economic growth. Average inflation has been lower since its implementation, barring a few exceptions during global shocks like the COVID-19 pandemic and geopolitical crises. Inflation Alignment: CPI inflation has mostly stayed within the target range, except during supply-driven pressures. This demonstrates the framework's flexibility in addressing temporary disruptions. Economic Impact: Das credited the FIT framework for enhancing monetary policy transmission and reducing inflation volatility, enabling better long-term economic planning and growth. The RBI's commitment to maintaining price stability underscores its role in fostering sustainable economic growth as it prepares for a review of the inflation target in 2025. [Source: Economic Times, Moneycontrol, Business Standard]