Inflation target at 4% implies recent policy continuation: DBS

TIL Desk/Business/New Delhi- The government fixing the retail inflation target at 4 per cent for the next five years suggests continuation of recent policy guidelines under the new RBI Governor, who is expected to be named later this month, says a DBS report.

According to the global financial services major, while the decision to maintain inflation target is encouraging, achieving the 4 per cent target on a sustainable basis will be a challenge in the absence of structural reforms.

“The government’s move to stick with the 4 per cent CPI inflation target (mid-point of the 2-6 per cent range) for the next five years implies policy continuity under the new governor, who is likely to be named later this month,” the report said. “We expect a continuation of recent policy guidance, where stance is accommodative while rates are left unchanged,” it added.