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RBI sets 6 pc consumer price index target for 2016

Dec 02, 2014 07:58 PM IST Business Business

Mumbai: The Reserve Bank of India (RBI) has set a target of 6 per cent for consumer price index by 2016, said RBI Governor Raghuram Rajan adding that inflation is near comfort zone.

Talking to Network18, the RBI Governor said inflation has been on the glide path. "We are seeing positive surprises on inflation. Hope it continues," he said.

Rajan said a lot of factors including luck helping fight against inflation. He did not expect global food prices to take off rapidly and that India can under-shoot 6 per cent inflation target.

He said the real rate of return should be between 1.5 per cent and 2.5 per cent.
He said 4 per cent inflation is considered good for a stable rupee. "The Finance ministry indicated its comfort with 4 per cent inflation target," he said.
Rajan said the Government and RBI have frequent healthy dialogues. "The Government understands our concerns and we understand the government's concern," he said.

Talking about oil, the RBI Governor said it is to be relatively benign and a strong demand is unlikely to emerge.

He claimed that India is much better prepared than in May 2014 to manage tapering. However, he said India needs little more comfort on inflation.
On gold import rule, the RBI Governor said it created distortions in market. Unwinding gold import curbs is always on the cards, he added.