- India is not expected to raise its official inflation target soon, RBI Governor said
- The current inflation target is 4% with a tolerance range of 2%-6% for five years
- India may consider lowering its inflation target gradually over the long term
India is not expected to raise its official inflation target anytime soon, while a reduction in the benchmark could be considered over the longer term, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Wednesday.
Addressing the Financial Congress of the Bank of Russia, Malhotra said India's inflation-targeting regime has helped reduce average inflation and strengthened overall macroeconomic stability.
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India adopted the flexible inflation-targeting framework in 2016, under which the RBI is mandated to keep headline retail inflation at a target set by the government.
In March this year, the government retained the inflation target at 4%, with a tolerance range of 2%-6%, for the next five years. Malhotra said there is no expectation of the target being raised in the foreseeable future.
However, he noted that with advanced economies operating with lower inflation goals, India may have a case to gradually reduce its own target over the long term.
The RBI Governor also said inflation in India is expected to rise from current levels but remains below the central bank's medium-term target.
He expressed confidence that the Indian economy would continue expanding at a strong pace in the coming years.
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India's retail inflation stood at 3.93% in May, remaining below the RBI's 4% target. Meanwhile, the country's economy recorded 7.8% year-on-year growth in the January-March quarter.
The comments come as policymakers continue to focus on balancing economic growth with price stability amid global uncertainties and changing inflation trends.
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