Overview
- The finance ministry’s gazette notification issued Wednesday under Section 45ZA sets a 4% CPI target with a 2–6% band for April 2026 to March 2031.
- The government acted in consultation with the RBI, opting for continuity after the central bank’s August 2025 paper floated changes to the target, band, and use of core inflation.
- Inflation in the new CPI series rose to 3.21% in February from the prior month, still under the target but vulnerable to oil costs and West Asia tensions.
- The six-member Monetary Policy Committee, led by the RBI Governor, will set interest rates to meet the goal and must explain any miss that lasts three straight quarters.
- This is the second five-year renewal since the framework began in 2016, a period over which average inflation fell to about 4.9% from 6.8% before adoption, according to RBI analysis.