Union Government fixes an inflation target of 4 percent for five years

Posted on:06 Aug 2016 18:17:47
Union Government fixes an inflation target of 4 percent for five years
06 August 2016 Current Affairs: The Union Government has set an inflation target of four per cent for the next five years i.e. till March 31, 2021. In this regard, Union Government will soon set-up Monetary Policy Committee (MPC) to adhere to the target till March 31, 2021. 

This target was fixed after the Union Government and Reserve Bank of India (RBI) had reached an agreement on a monetary policy framework. The framework had had set the inflation target at four per cent, plus or minus two per cent. However, there was no legal backing to it. The Union Government in June 2016 also had notified rules for setting up the MPC giving effect to amendments in the RBI Act.

Inflation targeting :  Inflation targeting is a monetary policy in which a central bank estimates and makes public a projected or “target” inflation rate. After declaration of target, the central bank attempts to steer actual inflation towards the target through the use of interest rate changes and other monetary tools. The key advantage of a target is that it allows to recognise the short run trade-offs between inflation and growth. It also enables Central Bank to pursue the inflation target in the long run over the course of a business cycle.

Monthly Current Affairs

Current Affairs Section

Daily Current Affairs Quiz

Subscribe to Current Affairs

Enter your email to get daily current affairs

Current Affairs January 2018

24 JANUARY
NEWS
23 JANUARY
NEWS
22 JANUARY
NEWS
21 JANUARY
NEWS

Current Affairs December 2017

31 DECEMBER
NEWS
30 DECEMBER
NEWS
29 DECEMBER
NEWS
28 DECEMBER
NEWS

Current Affairs November 2017

30 NOVEMBER
NEWS
29 NOVEMBER
NEWS
28 NOVEMBER
NEWS
27 NOVEMBER
NEWS