Monday, March 9, 2015

RBI's Inflation Targeting

In recent budget finance minister Arun Jaitley announced a new monetary policy measure called Inflation Targeting (see here). This is what the measure in specifics is, "the apex bank adopt the new Consumer Price Index (CPI) as the measure of the nominal anchor for monetary policy. And that the RBI set the target CPI inflation level at 4 per cent (+/- 2 per cent) to be achieved through its monetary policy tools."

So, what is this inflation targeting? Is it good for the Indian public and the economy at large? Or is it just another tool of fleecing off the (sheep) public? I answer these questions in my new economic analysis below.

 

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