TIL Desk/Business/New Delhi-The global experience of inflation targeting has not been impressive, with the number of countries facing negative inflation increasing in the last few years. The question is: Are such price declines purely the result of inflation targeting or a by-product of global disinflation?
Recently, the government notified a four per cent inflation target (Consumer Price Index or CPI) with a range of plus/minus two per cent for the next five years under the monetary policy framework agreement with the Reserve Bank of India.
Undoubtedly, this is one of the most crucial and path-breaking monetary policy reform till date. This policy change is also being touted as an adoption of a modern monetary policy framework. Since it was first implemented by New Zealand in 1990, inflation targeting has been adopted by 28 countries. India being one of the largest economies in the world is the latest addition to it.
