The Reserve Bank of India (RBI) is expected to recommend to retain an existing inflation goal for a third consecutive time after feedback from stakeholders who supported the framework, according to two sources that are familiar with the case.
Flexible inflation targeting in India requires a 4 percent headline inflation target within a tolerance bond of 2-6 percent.
Before March 2026, the RBI had requested opinions from economists, market participants and other stakeholders, if that target expired.
Most respondents support the continuation of the existing structure, according to the sources.
“There have been no major changes that are being asked,” said a senior source that is immediately aware of the feedback. “Most feel that the framework has worked pretty well.”
Although Tweaks can be considered the way in which the RBI communicates its monetary policy position, the core structure will probably remain unchanged, the second source said.
In 2016, India adopted inflation -target -framework, whereby the RBI was formally imposed by keeping the head of the Consumer Price head at 4 percent, with a margin of two percentage points on both sides. The framework was last renewed in 2021.
In the past decade, inflation has remained in the compulsory band about three -quarters of that time, with volatility peaking during the Pandemic years.
“Given the overlap with the COVID period, it is quite a performance,” said a prasanna, chief economist at ICICI Securities Primary dealer, adding that his company had not submitted any feedback because it broadly corresponded to the approach to the RBI.
Several others also prefer continuity.
“We expect that the numerical goals and the tolerance ties will be maintained for the third consecutive term,” says Radhika Rao, chief economist at DBS Bank.
“Although worldwide practices for preference give smaller bands, high weight for food and structural vulnerabilities make a wider range more suitable for India.”
The core debate
The RBI discussion document had also searched for whether the monetary policy should focus the headline’s headline or put the focus on core inflation, which excludes fleeting food and fuel prices.
A government report last year insisted on an evaluation of the framework, stating frequent inflation peaks that are powered by food prices. Some stakeholders, including a state run by the State, suggested giving more weight to core inflation, but stopped briefly when recommending the most important target.
But various officials from the Central Bank and members of the monetary policy committee have supported by aiming headline inflation, and say that food and fuel prices ultimately seep in broader inflation through the effects of the second and third round.
“For a country like India, where food and fuel contribute more than half to the CPI basket, these segments cannot be ignored. That is why we should not leave Headline CPI,” said Akshay Kumar, head of the World Markets at BNP Paribas.
“The 4 percent center objective remains relevant because India strives to grow faster than developed market colleagues.”
The framework balanced price stability with growth, said Vivek Rajpal, Asia strategist at JB Drax Honore.
“Taking on the head of the head is good, because volatility in Indian inflation is largely from food prices,” he added.
Separately, with the basket of the consumer price index basket next year, the weight of food is expected to decrease, which may reduce future volatility.
Published on September 19, 2025
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