---
title: "Is India's inflation targeting too rigid for this oil-shock climate?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/287102418.md"
description: "India's inflation-targeting framework has successfully reduced inflation but may be too rigid in the current volatile economic climate. The reliance on past inflation data can lead to pro-cyclical monetary policy, exacerbating business cycles. High real interest rates during banking crises have hindered growth, and recent aggressive rate hikes may have been premature. With rising oil prices due to geopolitical tensions, there is a risk that the Reserve Bank of India may react inappropriately to reported inflation, potentially harming economic stability."
datetime: "2026-05-20T09:54:56.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/287102418.md)
  - [en](https://longbridge.com/en/news/287102418.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/287102418.md)
---

# Is India's inflation targeting too rigid for this oil-shock climate?

There is little doubt that India’s inflation-targeting framework succeeded in reducing inflation. Before its introduction, India faced persistently high inflation, negative real interest rates, and recurring macroeconomic instability. The inflation rate often neared double digits, hurting household savings and creating uncertainty for investors. The post-inflation-targeting period has been markedly different, with lower inflation and greater monetary-policy credibility. Any serious discussion must begin by acknowledging this success.

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