BackThe fight against inflation gains muscle
Inflation below 6% by January 2016 and a band of 4% plus or minus 2% for 2016-17 and all subsequent years is a challenging target
Premium(Subarata Jana/Mint)
It is only since last October that Consumer Price Index (CPI)-based inflation has fallen below 6%. With the government and the Reserve Bank of India (RBI) agreeing to adopt an inflation target of below 6% by January 2016 and a band of 4% plus or minus 2% for 2016-17 and all subsequent years, the chart shows how much of a challenge this target is.
The agreement should help in bringing down inflationary expectations further. But it’s likely that the central bank will start targeting a 4% inflation rate from 2016-17, rather than peg the target at the higher end of the range, particularly because the government has taken a more relaxed view of fiscal consolidation. That may lead to the policy rate coming down by less than currently anticipated.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
