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RBI Working Paper Finds A Steady Decline In Trend Inflation In Recent Years


There has been a steady decline in trend inflation in India, the Reserve Bank of India noted in a Working Paper titled Measuring Trend Inflation in India . The Paper is authored by Harendra Kumar Behera and Michael Debabrata Patra. Central to the design and conduct of monetary policy is the concept of trend inflation, the level to which actual inflation outcomes are expected to converge after short run fluctuations from a variety of sources die out. The paper seeks to estimate trend inflation in India to find the answer to a question that goes to the root of flexible inflation targeting (FIT) - is the choice of the target for inflation consistent with its trend? ....

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India's inflation target should be maintained at 4%: RBI Working Paper


India’s inflation target should be maintained at 4%: RBI Working Paper
By IANS|   Published: 28th December 2020 11:27 pm IST
New Delhi, Dec 28 : India’s inflation target should be maintained at 4 per cent in the medium term, according to a working paper by the Reserve Bank of India (RBI).
The paper, published by the RBI’s Department of Economic and Policy Research, noted that central to monetary policy is the concept of ‘Trend Inflation’ to which actual inflation outcomes are expected to converge after short-run fluctuations die out.
Accordingly, the inflation target needs to be fixed in alignment with trend inflation to avoid unhinging inflation expectations and flattening the aggregate supply curve or imparting a deflationary bias to the economy. ....

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