Government steps up response, inflation target retained

After initially moving quite slowly, India’s government has stepped up its response to the impact of the Middle East conflict over the past few days. Excise duties on fuel exports have been hiked to ensure greater domestic supply, while domestic fuel duties have been trimmed. And the energy shock may also have played a role in the government’s earlier-than-expected confirmation this week that the RBI's current inflation target of 4%, with a tolerance band of 2-6%, will be retained for another five years.