Here we review these topics
1. [[Inflation|Inflation]]
2. Inflation as the nominal anchor of monetary policy [(Flexible Inflation Targeting (FIT) Framework)](Flexible%20Inflation%20Targeting%20(FIT).md)
3. Can RBI really control inflation?
1. Role of monetary policy in addressing inflation
**Why high inflation has far-reaching negative consequences?**
1. [Link](https://rbi.org.in/scripts/PublicationReportDetails.aspx?ID=746#:~:text=1.%20Introduction,of%20their%20savings)
>==The annual average WPI inflation declined from 8.1 per cent in the 1990s to 5.3 per cent in the 2000s. Similarly CPI inflation declined from 9.5 per cent to 5.5 per cent.== [^2]
**Inflation in India : Status and Issues (1999)**
Dr. Y. V. Reddy, in this [speech](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=33#BO) "Inflation in India : Status and Issues (1999)" at the Centre for Economic and Social Studies, Hyderabad on August 17, 1999
**Monetary Policy and Inflation ([Part 1](https://rbi.org.in/scripts/PublicationsView.aspx?Id=10809) and [Part 2](https://rbi.org.in/scripts/PublicationsView.aspx?Id=10810)) in the Report on Currency and Finance (Dec 2005).**
**Monetary Policy Response to Recent Inflation in India - Sept 2011**
2. In the [speech](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=598) at IIT-G, Deepak Mohanty, the then Executive Director, Reserve Bank of India, addresses following questions:
1. Why do we need to worry about inflation?
2. How did the inflation dynamics evolve over the past two years?
3. What was the monetary policy response?
**Inflation | Decoding the Dynamics (Oct 2011)**
In this speech of Oct 2011, "Inflation | Decoding the Dynamics", Deepak Mohanty, Executive Director, Reserve Bank of India, explained how the persistence of inflation over a year-and-a-half raises three key questions:
2. How did the inflation dynamics change? How will inflation evolve in future? Why do we need to contain inflation?
3. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=610)
**The Challenge of Food Inflation (Nov, 2011) and role of RBI
1. Dr. Duvvuri Subbarao, the then Governor, Reserve Bank of India, in his [speech](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=630) "The Challenge of Food Inflation" at the 25th Annual Conference of the Indian Society of Agricultural Marketing at Hyderabad on November 22, 2011 explains:
1. the underlying dynamics and the nature of the challenge of persistent and high food inflation,
2. and measures by RBI for addressing the challenge of food inflation on a durable basis, and
3. the role of monetary policy in the face of supply shocks.
**Food Inflation: This Time it's Different (Dec, 2011)**
1. In his [speech](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=638), Dr. Subir Gokarn, the then Deputy Governor, Reserve Bank of India, explained about the persistence of high inflation.
**The Shrinking Money and RBI’s Monetary Policy (Jan, 2012)**
1. In his [speech](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=651), H. R. Khan explained why since January 2010, the WPI inflation has remained within a range of 8 to 11 per cent in each of the 22 successive months till Nov 2011, when average WPI inflation over the five year period 2003-04 to 2007-08 was about 5.5 per cent., which is clearly above the stated comfort level of the RBI as the RBI’s monetary policy statements suggest that RBI’s monetary policy continues to aim at conditioning and containing perception of inflation in the range of 4 to 4.5 per cent.
2. ==He explains the causes and how RBI's monetary policy responses can help to soften inflation, albeit at the cost of sacrifice of some growth==.
3. From 2011 to 2013, RBI was subjected to intense public scrutiny in last for its monetary policy response to contain inflation and anchor inflation expectations.
>[Box III.3-Inflation and Asset Prices Revisited](RBI_Annual%20Report_2004.pdf#page=48&selection=3,0,4,36) in RBI's Annual Report 2004
>[Box II.7-Rupee Depreciation Impact on Inflation](RBI_Annual%20Report_2012.pdf#page=57&selection=4,0,5,37) in RBI's Annual Report 2012
>[Box II.3 - Pricing Power and Inflation](RBI_Annual%20Report_2013.pdf#page=51&selection=22,0,23,25) in RBI's Annual Report 2013
>[Box II.4 - Core Inflation: Alternate Methodologies](RBI_Annual%20Report_2013.pdf#page=52&selection=75,0,76,39) in RBI' Annual Report 2013
>[Box II.2.1 - Sensitivity of Inflation in India to Input Cost Pressures](RBI_Annual%20Report_2022.pdf#page=69&selection=40,0,41,56) in RBI's Annual Report 2022
**Food Inflation and Agricultural Supply Chain Management (Sept, 2012)**
1. In his [speech](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=736), H.R. Khan discussed about the role of agri-business in growth of the economy as well as inflation management, and the importance and potential of supply chain management in the evolving scenario.
>==High inflation has been with us in India for the last four decades (from 2016). Indian experienced an average of more than 9 percent inflation between 2006 and 2013. [^1]
**Inflation Puzzle of 2013 (Jan 31, 2013)**
1. A [speech](Inflation%20Puzzle%20-%202013%20by%20Deepak%20Mohanty%20(High%20Inflation%20while%20growth%20is%20falling%20between%20Jan-10%20to%20Dec-11).md) by Deepak Mohanty, the then Executive Director, Reserve Bank of India, on January 31, 2013 on why inflation was high while growth is falling between Jan-10 to Dec-11?
**Is there a new normal for inflation? (Mar 8, 2013)**
A [speech](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=789) by Dr Duvvuri Subbarao, the then Governor of the Reserve Bank of India, at the Bankers’ Club, New Delhi, 8 March 2013.
**Why is Recent Food Inflation in India so Persistent? (2014)**
1. In this [speech]((https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=867) at the St. Xavier’s College, Mumbai on 13th January 2014, Deepak Mohanty, the then Executive Director, Reserve Bank of India also shared how food economy does not pose a major constraint on the path of non-inflationary growth that could be sustained over the medium-to long-term.
**The fight against inflation - a measure of our institutional development (June, 2016)**
1. Raghuram Rajan, in his speech at TIFR, Mumbai, explains how RBI is trying to control the inflation, given the various constraints. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1007)
**Flexible Inflation Targeting Framework (2016)**
1. [Flexible Inflation Targeting (FIT)](Flexible%20Inflation%20Targeting%20(FIT).md) was adopted in 2016, and General (also called headline) CPI inflation (combined) became the anchor of the monetary policy approach.
2. Along with credit controls, the measures that can be taken by the RBI to contain monetary growth can be understood from the equation of [[Reserve Money|Reserve Money]].
**The new monetary policy framework – What it means (2020)**
1. C. Rangarajan in his paper - [The new monetary policy framework – What it means](https://www.nipfp.org.in/media/medialibrary/2020/02/WP_297_2020.pdf) (NIPP Working Paper No. 297) - February 21, 2020 shares the followings on whether the [[NIPFP_WPS_20200221_The new monetary policy framework – What it means (2020)_C. Rangarajan.pdf#page=7&selection=37,0,38,8|central bank can really control inflation]].
1. Can the RBI or for that matter any Central Bank effectively implement an inflation mandate? Do they have enough instruments to achieve the goal?
2. The ability of the Central Banks to control inflation when such inflation stems from excess demand is normally conceded.
3. It is when inflation is triggered by supply shocks, some doubts are raised. Such supply shocks are most common in countries like India where agricultural production is subject to the vagaries of nature. Even when inflation is triggered by food inflation, monetary policy and fiscal policy have a role to play. If food inflation lasts long, it gets generalized. Wages rise leading to general cost-push inflation. If the head line inflation exceeds the acceptable level, monetary policy must act at least to ensure that the return on financial assets is positive in real terms. In a situation of supply shocks, it may take longer for monetary policy to bring inflation down. Our experience with inflation post 2009-10 is a good example of this. That is why the inflation mandate as already mentioned must provide for a range and a time frame for adjustment which should not be too short. Nevertheless, monetary policy must act irrespective of what triggered inflation.
4. Obviously, supply-side management is needed in situations of supply stock and that should be the responsibility of the government. There is however an asymmetry in the way monetary policy functions. Monetary policy is able to handle better rise in inflation than deflation. There is the famous observation of which says that the central banking system is equipped with efficient brakes but the accelerator is uncertain. It is basically a case of the old sayings “you can take the horse to the pond but cannot compel it to drink”. Most developed countries today are concerned more with the role of monetary policy in reviving the economy.
5. There is a general belief that inflation continues to remain low despite expansionary policies to stimulate the economy – a slope in the shape of the Phillips curve. The natural interest rate is also deemed to have fallen.
6. As the Vice Chairman of Federal Reserve System said recently (Clarida, 2019), “All else being equal, a fall in natural rates increases the likelihood that a central bank’s policy rate will reach its effective lower bound (ELB) in future economic downturns. That development, in turn, could make it more difficult during downturns for monetary policy to support spending and employment, and keep inflation from falling too low”. The possibility of inflation rising to unacceptable levels is not ruled out in developing economies.
7. Obviously, a generally low inflation globally has its complications. Central banks in developing economies have still to be vigilant on the inflation front
## Related Notes
1. [[Inflation]]
2. [[Flexible Inflation Targeting (FIT)]]
3. [[Inflation Puzzle - 2013 by Deepak Mohanty (High Inflation while growth is falling between Jan-10 to Dec-11)|Inflation Puzzle - 2013 by Deepak Mohanty]]
4. [Monetary Policy Frameworks in India](Monetary%20Policy%20Frameworks%20in%20India.md)
## References
### [[Speeches & Media Interactions|Speeches]]
1. Y. V. Reddy. (1999). ==Inflation in India : Status and Issues.== Address by Dr.Y.V.Reddy, Deputy Governor, Reserve Bank of India at Centre for Economic and Social Studies, Hyderabad on August 17, 1999. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=33)
2. Deepak Mohanty. Jun 14, 2010. ==Perspectives on Lending Rates in India==. (Speech by Deepak Mohanty, Executive Director, Reserve Bank of India, delivered at the Bankers’ Club, Kolkata on 11th June 2010). [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=508)
3. Deepak Mohanty. (Sep 3, 2011). ==Monetary Policy Response to Recent Inflation in India==. Speech by Shri Deepak Mohanty, Executive Director, Reserve Bank of India, delivered at the Indian Institute of Technology (IIT), Guwahati on 3rd September 2011. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=598)
4. Deepak Mohanty. (Oct 19, 2011). ==Inflation | Decoding the Dynamics==. Article by Shri Deepak Mohanty, Executive Director, Reserve Bank of India, published in www.livemint.com. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=610)
5. Duvvuri Subbarao. (Nov 22, 2011). ==The Challenge of Food Inflation==. Presidential Address delivered by Dr. Duvvuri Subbarao, Governor, Reserve Bank of India at the 25th Annual Conference of the Indian Society of Agricultural Marketing at Hyderabad on November 22, 2011. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=630)
6. Subir Gokarn. (Dec 13, 2011) ==Food Inflation: This Time it's Different==. Kale Memorial Lecture delivered by Dr. Subir Gokarn, Deputy Governor, Reserve Bank of India at the Gokhale Institute of Politics and Economics, Pune on December 9, 2011. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=638)
7. H. R. Khan. (Jan 09, 2012). ==The Shrinking Money and RBI’s Monetary Policy==. Address delivered by Shri. H. R. Khan, Deputy Governor, Reserve Bank of India at 10th National Management Seminar – 2011, Bhubaneswar on The Shrinking Money: Combating Debt Crisis and Inflation on December 10, 2011 organized by The Asian School of Business Management. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=651)
8. Harun R. Khan. (Sep 23, 2012). ==Food Inflation and Agricultural Supply Chain Management==. Keynote address delivered by Shri Harun R. Khan, Deputy Governor, Reserve Bank of India, at the 16th Conference of Globoil India held in Mumbai on September 22, 2012. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=736)
9. Deepak Mohanty (Nov 09, 2012). ==The Importance of Inflation Expectations==. Speech by Shri Deepak Mohanty, Executive Director, Reserve Bank of India at S.P. Jain Institute of Management & Research, Mumbai, November 9, 2012. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=748)
10. Deepak Mohanty. (Jan 31, 2013). ==Indian Inflation Puzzle==. Acceptance Speech by Deepak Mohanty, Executive Director, Reserve Bank of India, in the function of Late Dr. Ramchandra Parnerkar Outstanding Economics Award 2013 at Mumbai on January 31, 2013. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=776)
11. Duvvuri Subbarao. (Mar, 2013). ==Is there a new normal for inflation?== Speech by Dr Duvvuri Subbarao, Governor of the Reserve Bank of India, at the Bankers’ Club, New Delhi, 8 March 2013. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=789)
12. Duvvuri Subbarao. (Aug 30, 2013). ==Statistics in RBI’s Policy Making Conceptual and Empirical Issues==. (Inaugural address by Dr. Duvvuri Subbarao, Governor, Reserve Bank of India at the 7th Statistics Day Conference of RBI, Mumbai on August 30, 2013). [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=835)
13. Deepak Mohanty. (Jan 13, 2014). ==Why is Recent Food Inflation in India so Persistent?== - Speech delivered by Shri Deepak Mohanty, Executive Director, Reserve Bank of India, at the St. Xavier’s College, Mumbai on 13th January 2014. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=867)
14. Raghuram Rajan. (Feb 26, 2014). ==Fighting Inflation==. Inaugural speech by Dr. Raghuram Rajan, Governor, Reserve Bank of India at FIMMDA-PDAI Annual Conference 2014, on February 26, 2014 at Mumbai. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=878)
15. Raghuram G. Rajan. (Jun 20, 2016). ==The fight against inflation: a measure of our institutional development==. Dr. Raghuram G. Rajan, Governor - June 20, 2016 - at Tata Institute of Fundamental Research, Mumbai. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1007)
16. Shaktikanta Das. (Jul 09, 2022). ==Globalisation of Inflation and Conduct of Monetary Policy==. Speech by Shri Shaktikanta Das, Governor, Reserve Bank of India - July 9, 2022 - Delivered at the Kautilya Economic Conclave, organised by Institute of Economic Growth in New Delhi. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1317)
17. Michael Debabrata Patra. Oct 15, 2024. ==Assessing Inflation Targeting==. Address delivered by Michael Debabrata Patra, Deputy Governor, Reserve Bank of India - October 14, 2024 - at the High Level Conference “Central Banking at Crossroads” organised by the Reserve Bank of India as apart of commemoration of its 90th year at New Delhi, India. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1471)
18. Shaktikanta Das. Nov 21, 2024. ==Balancing Inflation and Growth: The Cardinal Principle of Monetary Policy==. Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - November 21, 2024 - “High-Level Policy Conference of Central Banks from the Global South Building Synergies”, Mumbai. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1482)
19. Poonam Gupta. (Nov 26, 2025). ==Timely and Topical Statistics for Agile Policy Making== - Speech by Dr. Poonam Gupta, Deputy Governor, Reserve Bank of India delivered at the Pre-release Consultative Workshop on Base Revision of Consumer Price Index (CPI), Gross Domestic Product (GDP) and Index of Industrial Production (IIP) at Mumbai on November 26, 2025. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=1534)
### [[Publications (Data Releases) & Research#Research|Research]]
[[Working Paper Series (WPS)|Working Paper Series (RBI)]]
1. Sitikantha Pattanaik, Silu Muduli and Soumyajit Ray. (Feb 28, 2019). ==Inflation Expectations of Households: Do They Influence Wage-Price Dynamics in India?== RBI WPS (DEPR): 01/2019:Press Release. [Link](https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=46424)
2. Janak Raj, Sangita Misra, Asish Thomas George and Joice John. (May 12, 2020). ==Core Inflation Measures in India - An Empirical Evaluation using CPI Data==. RBI WPS (DEPR): 05/2020. [Link](https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=49803)
3. GV Nadhanael. Sep 23, 2020. ==Are Food Prices Really Flexible? Evidence from India==. RBI WPS (DEPR): 10/2020. [Link](https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50401)
4. G. P. Samanta and Shweta Kumari. (Jan 25, 2021). ==Monetary Policy Transparency and Anchoring of Inflation Expectations in India==. RBI WPS (DEPR): 03/2021. [Link](https://rbi.org.in/scripts/PublicationsView.aspx?Id=20318)
[Groups/Committees](Groups%20and%20Committees.md)
1. RBI (Jan, 2014). Report of the Expert Committee to Revise and Strengthen the Monetary Policy Framework. [Link](RBI_Report_2014_The%20Expert%20Committee%20to%20Revise%20and%20Strengthen%20the%20Monetary%20Policy%20Framework-2014_Chairman-Urijit%20R.%20Patel.pdf)
### [[Publications (Data Releases) & Research#Publications|Publications]]
1. RBI (Dec, 2005). ==Report on Currency and Finance Theme: Monetary Policy (2003-04)==. [Link](https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/59580.pdf)
2. RBI. (Feb 26, 2011). ==Chapter I: Flexible Inflation Targeting (FIT) in India in the "Report on Currency and Finance".== [Link](https://rbi.org.in/scripts/AnnualPublications.aspx?head=Report%20on%20Currency%20and%20Finance)
3. RBI. (Feb 26, 2021). ==Chapter II: The Goals of Monetary Policy in "Report on Currency and Finance".== [Link](https://rbi.org.in/scripts/PublicationsView.aspx?Id=20343)
4. [Box II.2.1-Sensitivity of Inflation in India to Input Cost Pressures](RBI_Annual%20Report_2022.pdf#page=69&selection=40,0,41,56) in RBI's Annual Report 2022
### Others
1. Rania A. Al-Mashat. (April 13, 2018). _India: Stabilizing inflation_. In Advancing the frontiers of monetary policy (Chapter 11). International Monetary Fund. [Link](https://www.elibrary.imf.org/display/book/9781484325940/ch011.xml)
2. Chakravarthi Rangarajan. (2020, February 21). The new monetary policy framework. What it means. (NIPFP Working Paper No. 297). National Institute of Public Finance and Policy. [Link](https://www.nipfp.org.in/media/medialibrary/2020/02/WP_297_2020.pdf)
3. Patrick Blagrave and Weicheng Lian (Nov, 2020). ==India’s inflation process before and after flexible inflation targeting.== (IMF Working Paper No. WP/20/251). International Monetary Fund. [Link](https://www.imf.org/-/media/files/publications/wp/2020/english/wpiea2020251-print-pdf.pdf)
[^1]: Raghuram G. Rajan. (Jun 20, 2016). ==The fight against inflation: a measure of our institutional development==. Dr. Raghuram G. Rajan, Governor - June 20, 2016 - at Tata Institute of Fundamental Research, Mumbai. [Link](https://rbi.org.in/Scripts/BS_SpeechesView.aspx?Id=1007)
[^2]: RBI. Jun 14, 2010. ==Perspectives on Lending Rates in India==. (Speech by Deepak Mohanty, Executive Director, Reserve Bank of India, delivered at the Bankers’ Club, Kolkata on 11th June 2010). [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=508)