India unlikely to raise inflation target, RBI Governor Sanjay Malhotra says; expects strong growth
The country’s inflation targeting framework has helped reduce average inflation, the central bank governor said in a meeting with his Russian counterpart Elvira Nabiullina.
India adopted the inflation targeting framework in 2016, which mandates the Reserve Bank of India to keep headline consumer price inflation within a range set by the government.
In March, the government maintained its retail inflation target of 4%, within the 2%-6% comfort band, following a review. The target will remain in place for five years.
Malhotra said he did not expect the inflation target to be raised in the foreseeable future, but added that given the low inflation targets in developed economies, there may be a possibility that India could lower its target in the long run.
Speaking at the Financial Congress of the Central Bank of Russia, Malhotra said that while inflation is expected to rise in India, it is currently below the central bank’s target. He added that he is confident the economy will continue to grow rapidly for the foreseeable future.
India’s retail inflation stood at 3.93% in May and the economy grew 7.8% on an annual basis in the quarter ending March. The government has not yet released retail inflation data for June.
