The government is due to issue the RBI with a new inflation target next year, and there are suggestions that it is considering relaxing the existing framework perhaps by widening the “tolerance band”. But there isn’t any evidence that the current set-up is forcing the RBI to keep policy tight. Instead, its credibility has delivered lower and more stable inflation without requiring interest rates to be high. Changing the framework after only five years would be a mistake.
- This will be the last India Economics Weekly for 2020. The next Weekly will be sent on Friday 8th Jan. 2021 -
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services