The Government of India has notified the continuation of the 4% Consumer Price Index (CPI) inflation target with a tolerance band of 2-6% for the five-year period from April 2026 to March 2031. This maintains the existing framework under which the Reserve Bank of India conducts its monetary policy through the Monetary Policy Committee.
The decision provides policy certainty and continuity, signaling the government's confidence in the inflation targeting framework introduced in 2016. The 4% target has served as an effective anchor for inflation expectations, with recent CPI readings at 3.21% in February 2026, well below the target. The framework requires the RBI to explain to the government if inflation exceeds 6% or falls below 2% for three consecutive quarters. Economists note the retained target appropriately balances price stability with growth considerations.