Govt Extends RBI's 4% Retail Inflation Target Until March 2031

• Government mandates RBI to maintain retail inflation at 4% with a 2% margin on either side for another five years, until March 31, 2031.
• This marks the second time the government has retained the inflation target since its initial mandate in 2016.
• The inflation target is 4% with an upper tolerance of 6% and a lower tolerance of 2%, as per a gazette notification.
• India adopted the inflation-targeting framework in 2016, with the Monetary Policy Committee (MPC) determining policy rates.
• RBI undertook a review of the inflation target's nature and format, seeking feedback on optimal target levels and tolerance bands.