{"id":14626,"date":"2021-04-01T00:00:00","date_gmt":"2021-04-01T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/01-04-2021\/inflation-targeting\/"},"modified":"2021-04-01T00:00:00","modified_gmt":"2021-04-01T00:00:00","slug":"inflation-targeting","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/01-04-2021\/inflation-targeting","title":{"rendered":"Inflation Targeting"},"content":{"rendered":"<p><strong>In News<\/strong><\/p>\n<p>The government has kept the <strong>inflation-targeting framework<\/strong> (4%, with a tolerance band of +\/- 2 percentage points) for the RBI unchanged for the five-year period beginning 1 April 2021.<\/p>\n<p><strong>Background<\/strong><\/p>\n<ul>\n<li>The Central Government has notified 4 per cent <strong>Consumer Price Index (CPI) inflation<\/strong> as the target for the period from August 5, 2016, to March 31, 2021, with the upper tolerance limit of 6 percent and the lower tolerance limit of 2 per cent.<\/li>\n<li>Now there is a flexible inflation targeting framework in India (aft<strong>er the 2016 amendment to the Reserve Bank of India (RBI) Act, 1934<\/strong>).<\/li>\n<li>The amended RBI Act provides for the inflation target to be <strong>set by the Government of India<\/strong>, <strong>in consultation with the Reserve Bank<\/strong>, once every five years.<\/li>\n<\/ul>\n<p><strong>What is Inflation Targeting?<\/strong><\/p>\n<ul>\n<li>It is a <strong>central banking policy<\/strong> that revolves around <strong>adjusting monetary policy <\/strong>to <strong>achieve a specified annual rate of inflation<\/strong>.<\/li>\n<li>Its principle is based on the belief that <strong>long-term economic growth is best achieved by maintaining price stability<\/strong>, which is achieved by controlling inflation.<\/li>\n<\/ul>\n<p><img decoding=\"async\" src=\"https:\/\/cfstatic.nextias.com\/cdn-cgi\/image\/format=auto\/file_library\/mix_content\/582438852664597200_image.png\" style=\"height:317px; margin-left:150px; margin-right:150px; width:338px\" \/><\/p>\n<p>(Image Courtesy: <a href=\"https:\/\/economictimes.indiatimes.com\/news\/economy\/indicators\/india-adopts-inflation-target-of-4-for-next-five-years-under-monetary-policy-framework\/articleshow\/53564923.cms\" target=\"_blank\" rel=\"noopener\">ET<\/a>)<\/p>\n<p><strong>Inflation<\/strong><\/p>\n<ul>\n<li>\n<ul>\n<li>It refers to the<strong> rise in the prices of most goods and services <\/strong>of daily or common use, such as food, clothing, housing etc.<\/li>\n<li>It<strong> measures the average price change in a basket of commodities and services<\/strong> over time.\n<ul>\n<li>The <strong>opposite and rare fall<\/strong> in the price index of this basket of items is called \u2018<strong>deflation<\/strong>\u2019.<\/li>\n<\/ul>\n<\/li>\n<li>It is<strong> indicative of the decrease in the purchasing power of a unit of a country\u2019s currency<\/strong>.<\/li>\n<li>This is measured in <strong>percentage<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Source: <a href=\"https:\/\/www.livemint.com\/politics\/policy\/indias-inflation-targeting-framework-kept-unchanged-for-next-five-years-11617195203211.html\" target=\"_blank\" rel=\"noopener\">LM<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In News The government has kept the inflation-targeting framework (4%, with a tolerance band of +\/- 2 percentage points) for the RBI unchanged for the five-year period beginning 1 April 2021. Background The Central Government has notified 4 per cent Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":14627,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[26,46],"class_list":["post-14626","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","tag-gs-3","tag-indian-economy-related-issues"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/7720814current-affairs.jpg","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/14626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=14626"}],"version-history":[{"count":0,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/14626\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/14627"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=14626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=14626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=14626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}