Inflation Targeting in India
The 4% Midpoint and Tolerance Band
India's inflation targeting framework mandates the RBI to maintain CPI headline inflation at 4% (target midpoint), with a tolerance band of ±2% (i.e., 2%–6%). Inflation above 6% for three consecutive quarters or below 2% for three consecutive quarters triggers the RBI's obligation to report to the government explaining the failure and the remedial steps. The 4.6% projection for FY27 is above the midpoint but comfortably within the band.
- Inflation target: 4% CPI (set by GoI in consultation with RBI, reviewed every 5 years)
- Current target period: 2021–2026 (reset in 2021)
- Tolerance band: 2%–6%
- Primary objective: Price stability (not growth maximisation)
- Secondary objective: Support growth while keeping inflation in check
- CPI inflation drivers in FY27: Crude oil pass-through, food prices (despite record harvest), rupee depreciation-led import inflation
● Tracked since April 08, 2026 · last seen May 02, 2026 · updates as the daily brief publishes
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