Flexible Inflation Targeting (FIT) Framework
India adopted the Flexible Inflation Targeting framework through amendments to the RBI Act in 2016, giving statutory backing to inflation targeting as the primary objective of monetary policy. "Flexible" in this context means the central bank targets a specific rate of inflation (4%) but has latitude to accommodate short-term deviations caused by supply shocks, without being rigidly bound to zero deviation. The framework uses the Consumer Price Index (CPI) — specifically CPI-Combined — as the benchmark, reflecting the cost of a basket of goods and services for an average Indian household.
- Framework first notified on August 5, 2016, under Section 45ZA, RBI Act, 1934.
- CPI-Combined (all-India) is the official inflation measure for the target.
- The ±2% tolerance band gives the MPC room to handle supply-side shocks without aggressive rate changes.
- The RBI must submit a report to the government if inflation exceeds the upper tolerance limit (6%) for three consecutive quarters — explaining the reasons and steps to restore the target.
- India's earlier monetary policy relied on Multiple Indicator Approach and was not statutorily anchored.
● Tracked since February 25, 2026 · last seen August 19, 2026 · updates as the daily brief publishes
12 Aug '26
Retail inflation hits 19-month high of 4.45% in July 2026 as food, fuel prices rise
Economics
12 Aug '26
India’s July inflation quickens to 4.45% from 4.38% in June, stays above RBI target
Economics
06 Aug '26
RBI holds repo rate at 5.25%, raises FY27 growth forecast, cuts inflation outlook
Economics
27 Jul '26
RBI to hold rates through 2026 as growth risks outweigh inflation: Poll of economists
Economics
17 Jul '26
Iran war and monsoons key risk for Indian economy, says RBI Governor Sanjay Malhotra
Economics
13 Jul '26
India's June retail inflation quickens to 4.38%, crosses RBI's 4% target after 17 months
Economics
24 Jun '26
RBI in wait-and-watch mode, no certainty on rate hike: Governor Sanjay Malhotra
Economics
20 Apr '26
RBI plans to remain nimble to prevent persistent supply shock amid West Asia crisis
Economics
08 Apr '26
RBI keeps interest rates unchanged, says upside risks to inflation have increased
Economics
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