India Unlikely to Raise Inflation Target, May Lower It Long Term: RBI Governor

New Delhi, Jul 2 (KNN) Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said India is unlikely to raise its official inflation target and may even consider lowering it over the long term as the economy continues to maintain relatively low inflation.

RBI Sees No Need to Raise Inflation Target 

Speaking at the Financial Congress of the Bank of Russia during a discussion with Russian central bank Governor Elvira Nabiullina, Malhotra said India's inflation-targeting framework has helped reduce average inflation since its adoption in 2016.

India follows a flexible inflation-targeting framework under which the RBI is mandated to maintain retail inflation at 4 percent, with a tolerance band of 2-6 percent. 

The central government retained the target for another five years following its review in March. Malhotra said there is no expectation of raising the inflation target in the foreseeable future. 

However, considering that several advanced economies have lower inflation targets, there could be a case for reducing India's target over the longer term.

Inflation Below Target, Growth Outlook Remains Strong 

He noted that while inflation is expected to edge higher in the coming months, it currently remains below the RBI's target level. Malhotra also expressed confidence that the Indian economy would continue to record strong growth in the years ahead.

India's retail inflation eased to 3.93 percent in May, while the economy expanded 7.8 percent year-on-year in the quarter ended March. Official retail inflation data for June is yet to be released.

(KNN Bureau)