Inflation-targeting: At what cost to growth?

The Urjit Patel committee report to revise and strengthen India’s current monetary policy framework recommends a shift to inflation-targeting (IT). It is felt that an IT regime, in which inflation becomes the predominant objective, will make monetary policy more transparent and predictable. It presents a two-year period of disinflation ending in the formal adoption of IT with a 4% CPI inflation target and a 2% deviation band on either side.

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