Why is it in the news?
The government retained the 4% inflation target till 2031.
Category: Economy
Important Points:
● Target: 4% ± 2% (2%–6% range)
● Under Flexible Inflation Targeting (FIT)
● Legal basis: Section 45-ZA of RBI Act, 1934
● CPI is inflation anchor
● MPC decides repo rate
● Failure → report to govt if deviation for 3 quarters
● Adopted in India in 2016 (Urjit Patel Committee)
● Average inflation reduced to ~4.9% post-FIT
● Balances price stability and growth
● Used monetary tools like repo, CRR, OMO, SLR