India should adopt 2% inflation target like advanced economies: RBI official

An RBI monetary policy official has advocated for India to adopt a 2 percent inflation target, contending that harmonising with the benchmark maintained by advanced economies would enhance the central bank's ability to support sustainable growth.

The official argued that maintaining a stringent anti-inflationary stance through monetary policy represents the most significant lever available to policymakers for promoting long-term economic expansion. By keeping price pressures contained, central banks create the conditions necessary for stable investment, consumption, and productive activity across the economy.

The proposal reflects international best practices, with most developed economies targeting inflation rates around 2 percent as a balance between price stability and economic dynamism. Policymakers have long debated whether emerging markets like India should adopt similar frameworks or maintain differentiated targets reflecting their distinct economic structures and development stages.

India's current inflation target framework has served as the operational anchor for RBI policy in recent years, though officials continue to assess whether adjustments could better serve the dual objectives of price stability and growth support. The timing of these comments comes as the central bank navigates persistent inflationary pressures while attempting to maintain conditions conducive to economic recovery and expansion.