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RBI working paper argues for 4% inflation target

Updated : December 29, 2020 10:28:47 IST

The Reserve Bank of India's (RBI) working paper, authored by deputy governor Michael Patra, has argued for maintaining the inflation target at 4 percent.

RBI's current mandate seeks to maintain headline inflation at 4 percent by March 31, 2021 (plus or minus 2 percent). It was signed in 2016, which will complete 5 years in 2021. Hence, the inflation target will be reviewed in March 2021.

Michael Patra was one of the authors of the paper in 2016 as well.

While the target is stricter, it will not be seen as negative. On the contrary, it removes uncertainty and the bond markets may welcome it.

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