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      Question

      What inflation target is the Government of India likely to retain for the RBI under the current monetary policy framework? 

      A 3% ± 1% Correct Answer Incorrect Answer
      B 4% with a tolerance band of 2%–6% Correct Answer Incorrect Answer
      C 5% ± 2% Correct Answer Incorrect Answer
      D 4.5% ± 1.5% Correct Answer Incorrect Answer
      E Flexible inflation targeting without a fixed band Correct Answer Incorrect Answer

      Solution

      The government is likely to retain the 4% inflation target with a tolerance band of 2%–6%, a framework in place since 2016. It is renewed every five years and is considered effective in anchoring inflation expectations and guiding RBI’s interest rate decisions. 

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