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Inflation Targeting Framework

India's Flexible Inflation Targeting (FIT)

India adopted Flexible Inflation Targeting (FIT) in 2016 through an amendment to the RBI Act. Under FIT, the Central Government sets the inflation target (in consultation with RBI) and the MPC uses the repo rate to achieve it. "Flexible" means the RBI can take into account growth considerations while targeting inflation, unlike rigid targeting.

Key details

Legal basis: RBI Act Section 45ZA — Central Government shall set the inflation target every 5 years in consultation with RBI.
Current target: 4% CPI inflation ± 2% tolerance band (2–6%), set for the period 2021–2026 (subsequently renewed).
The MPC must publish a report explaining its actions if inflation remains outside the tolerance band for three consecutive quarters — an "accountability mechanism."
Urjit Patel Committee (2014): recommended adopting a CPI-based inflation target (as opposed to WPI), establishing the MPC, and using the repo rate as the sole policy rate — all adopted through the 2016 amendments.
CPI projection FY27: 4.6% headline; core CPI: 4.4% — above target but within tolerance band.

In the news

● Tracked since February 06, 2026 · last seen August 05, 2026 · updates as the daily brief publishes

05 Aug '26

RBI's Monetary Policy Committee Holds Repo Rate, Revises Growth and Inflation Outlook

02 Aug '26

RBI Expected to Hold Repo Rate in August MPC Meeting Amid Inflation Concerns

17 Jul '26

RBI Flags West Asia Crisis and Monsoon Uncertainty as Key Growth Risks

22 Jun '26

RBI MPC: Growth Could Exceed 7% if Oil Prices Fall Further

21 Jun '26

RBI Expected to Hold Repo Rate at 5.25% as MPC Monitors Food and Fuel Inflation

19 Jun '26

RBI Monetary Policy Committee Holds Repo Rate at 5.25%, Revises Growth and Inflation Outlook

12 Jun '26

India's CPI Inflation Rises to 3.93% in May 2026: CPI Methodology and the Inflation Targeting Framework

22 May '26

Bank Economists Warn of Possible RBI Rate Hike in H2 FY27 Amid West Asia Conflict

18 May '26

RBI Monitors Supply Shock Transmission Into General Inflation as West Asia Conflict Elevates Oil Prices

02 May '26

RBI Governor Flags Geo-Economic Fragmentation as Central Risk to India's Growth

24 Apr '26

RBI Bulletin Flags West Asia Conflict as Key Risk to India's Economy

24 Apr '26

RBI Bulletin Flags West Asia Conflict as Key Risk to India's Economy

22 Apr '26

RBI Monetary Policy Committee Signals Caution as War-Driven Supply Shocks Test Policy Tools

15 Apr '26

Wholesale Inflation Hits 38-Month High of 3.88% in March 2026

13 Apr '26

India's Retail Inflation Rises to 3.4% in March 2026 on LPG Hike and Food Prices

13 Apr '26

India's Retail Inflation Rises to 3.4% in March 2026: Below RBI Target but Pressure Building

09 Apr '26

Economists Forecast Rate Pause Through FY27; Hike More Likely Than Cut If Geopolitical Risks Escalate

09 Apr '26

India Navigating Global Crises Like a Chakravyuh: Shaktikanta Das on Economic Resilience

09 Apr '26

World Bank: India Has Strong Buffers Against West Asia Energy Shock, Growth Revised to 6.6%

08 Apr '26

RBI Retains FY26 GDP at 7.6%, Sets FY27 Growth at 6.9% and Inflation at 4.6%

08 Apr '26

RBI April 2026 Monetary Policy: Neutral Stance Retained, Repo Rate at 5.25%

08 Apr '26

RBI Governor Warns: West Asia Conflict to Impede Growth and Elevate Imported Inflation

08 Apr '26

RBI MPC April 2026: Repo Rate Held at 5.25%, GDP Projected at 6.9% for FY27

08 Apr '26

RBI Flags West Asia War Risks: Crude Oil, Remittances, and Export Pressures on India

08 Apr '26

RBI Projects FY27 CPI Inflation at 4.6% Amid West Asia Conflict Risks

08 Apr '26

RBI Holds Repo Rate at 5.25%: Warns of West Asia Conflict Impact on Indian Economy

08 Apr '26

RBI Retains FY26 GDP at 7.6%, Projects FY27 at 6.9% Amid Iran War and Oil Price Risks

07 Apr '26

RBI MPC April 2026: Rate Hold Expected as West Asia Crisis Stokes Inflation Fears

06 Apr '26

RBI's Monetary Policy Committee Meets Amid Oil Shock and West Asia Crisis

27 Mar '26

RBI Expected to Hold Interest Rates at 5.25% Until Mid-2027 as Inflation Stays Below Target

Plus 21 earlier mentions since February 06, 2026.

Related concepts

Monetary Policy Committee (MPC)

Consumer Price Index (CPI)

How Oil Shocks Transmit Through the Indian Economy

Purchasing Managers' Index (PMI)

Repo Rate and Monetary Policy Transmission

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