The central bank will be required to bring out a document every six months explaining the sources of inflation and a forecast for inflation for the next 6-18 months. Photo: Ramesh Pathania/Mint
New Delhi: The Reserve Bank of India (RBI) will look to contain consumer price inflation within 6% by January 2016 and within 4% with a band of +-2 percentage points for all subsequent years, as per the monetary policy framework agreement between the central bank and the Union government on 20 February.
“It is essential to have a modern monetary policy framework to meet the challenge of an increasingly complex economy,” the agreement put up on the finance ministry website on Monday said, adding that the objective of the monetary policy is to primarily maintain price stability while keeping in mind the objective of growth.
Also, the central bank would be seen failing to meet the target if retail inflation is more than 6% for three consecutive quarters from the next fiscal and less than 2% for three consecutive quarters from 2016-17.
In this case, the central bank will have to explain the reasons for failure to meet the target as well as give a timeframe within which it will achieve the target.
RBI will publish the operating targets as well as an operating procedure for the monetary policy through which the target will be achieved. The central bank will be required to bring out a document every six months explaining the sources of inflation and a forecast for inflation for the next 6-18 months.
Finance minister Arun Jaitley had announced the agreement for a monetary policy framework in his budget on Saturday.
No comments:
Post a Comment