7.8.16

Union Government fixes an inflation target of 4 percent for five years

Union Government fixes an inflation target of 4 percent for five years


The Union Government has set an inflation target of 4 % for the next five years with a range of plus/minus 2 % for the next five years under the monetary policy framework agreement with the Reserve Bank. In this regard, Union Government will soon set-up Monetary Policy Committee (MPC) to adhere to the target till March 31, 2021. 

This target was fixed after the Union Government and Reserve Bank of India (RBI) had reached an agreement on a monetary policy framework. The Union Government in June 2016 also had notified rules for setting up the MPC giving effect to amendments in the RBI Act, which had amended through Finance Act 2016 to provide for a Monetary Policy Committee (MPC) with a specific inflation goal, but it did not notify the inflation target.

So let's discuss some questions related to this post:
1. Union Government has fixed an inflation target of how much percent for five years?

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