Rajan says retail inflation targeting awaits government nod

Rajan said the committee's proposed time horizon for 6 per cent inflation seems doable without extreme hardship.

“If the eventual decision of the government, in consultation with the Reserve Bank, is to adopt the recommendations of the Mistry, CFSR, FSLRC and the Patel committees, and focus on some form of an inflation objective, it would be good for the medium-term inflation target to be set by the executive or the legislature, presumably based on advice from the Reserve Bank and other experts from the Reserve Bank,” the Governor said.

“All this said, international experience suggests that ideally once the central bank's objective is given and the operational target fixed, the government should leave the technocrats in the central bank to do their job,” he added.

He said the Patel committee does not turn the RBI into “nutters” focused on bringing down inflation to the exclusion of all else, including financial stability.