As the Reserve Bank of India (RBI) reviews its inflation targeting framework, CNBC-TV18 polled 15 leading economists to gauge their views on whether the current system should be changed.

The framework, in place since 2016, mandates that the RBI’s Monetary Policy Committee keep inflation target at 4% with a tolerance band of 2–6%.

The RBI has invited feedback from the public as part of its five-year review, asking whether the framework has worked well or needs changes.

Here’s what the poll revealed:
Q1. Should RBI target headline CPI or core CPI (excluding food and fuel)?

Food and fuel prices are volatile and often influenced by factors like weather, which interest rates cannot control. Should the RBI ignore them and target core inflation instead?

A: Economists say no. Over 90% want the RBI to continue targeting headline inflation, which includes food and fuel, arguing that’s what matters most to the common man. Just one economist suggested excluding vegetables from the target.

Q2. Should RBI alter the target of 4% CPI inflation?

A: All respondents said the 4% target should be retained. One economist argued that inflation globally is above trend and could rise in India too, but even he opposed raising the target, saying it would signal weak commitment to fighting inflation.

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Q3. Should RBI change the tolerance band of ±2% (i.e. 2–6%)?

A: Here, opinions diverged. While 80% said the 2–6% band should remain unchanged, 20% favoured narrowing it to 3–6%. One economist suggested a 4.5% target with a +/- 1.5% band but admitted that would be messy.

Q4. Should RBI abandon the point target of 4% and retain only the range?

A: All economists said no. They stressed that the RBI should maintain both the point target of 4% and the 2–6% band around it.

The poll suggests near-unanimous support for continuing with the current inflation targeting framework.

Economists believe it provides credibility, anchors expectations, and ensures that inflation remains a key focus for monetary policy.

(Edited by : Sheersh Kapoor)