[feb]Inflation Targeting

Question 1

What are current inflation targets?

Answer 1

Report on Currency and Finance for FY21, has said the current inflation target of 4% with a +/-2% tolerance band is appropriate for the next five years.

Question 2

Who sets them?

Answer 2

amended RBI Act provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once every five years.

Question 3

What is inflation targeting?

Answer 3

-central banking policy that revolves around adjusting monetary policy to achieve a specified annual rate of inflation.

Question 4

What is principle of inflation targeting?

Answer 4

long-term economic growth is best achieved by maintaining price stability, and price stability is achieved by controlling inflation