RBI Champions Success of Flexible Inflation Targeting Framework Amidst Global Challenges

The Reserve Bank of India's (RBI) flexible inflation targeting (FIT) framework has proven effective since its launch, adeptly navigating economic challenges to meet national requirements, according to a recent report.

The framework, established in 2016 and reviewed in 2021, has maintained stable inflation at an average of 4% until late 2019, despite facing increased challenges from food and fuel price shocks exacerbated by the pandemic and geopolitical tensions like the Russia-Ukraine conflict.

Notably, India's reliance on food and energy complicates inflation management, setting it apart from other economies. The RBI credited successful monetary fiscal coordination between the central bank and government for FIT's success, suggesting it as a model for countries confronting similar inflationary pressures.