India's medium-term inflation target of 4% is appropriate for the country under RBI's flexible inflation targeting (FIT) mandate, an internal report from the Reserve Bank of India said on Friday.
"Trend inflation to which actual inflation converges after a shock provides an appropriate benchmark for the inflation target; trend inflation has fallen from above 9% before FIT to a range of 3.8%-4.3% during FIT," the RBI said in its release.
India adopted the flexible inflation targeting framework in 2016 and Centre is due to review the same in the near future.
"The current numerical framework for defining price stability, i.e., an inflation target of 4% with a +/-2% tolerance band, is appropriate for the next five years," RBI said.
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