India has reaffirmed its inflation-targeting framework, retaining a 4% retail inflation objective with a tolerance band of 2–6% for the five-year period from April 2026 to March 2031. The decision, formalised through a gazette notification by the Department of Economic Affairs in consultation with the Reserve Bank of India (RBI), preserves the existing policy architecture.
This is the second successive extension of the framework, which was first introduced in 2016 and renewed in 2021. Under the flexible inflation targeting (FIT) regime, the six-member Monetary Policy Committee (MPC), chaired by the RBI Governor, is tasked with keeping inflation close to 4%, while allowing fluctuations within the specified band.
The decision reinforces continuity in India’s monetary policy strategy, supporting stability and predictability for financial markets. Recent data showed retail inflation rising to 3.21% in February from 2.74% in the previous month, still within the official target range.
