The government on Friday implemented its central inflation target of 4% with a range of plus or minus 2% for the next five years under the monetary policy framework agreement it had arrived at with the Reserve Bank of India. Junior Finance Minister Arjun Ram Meghwal tabled the notification in Parliament.

The government and the RBI had entered into the agreement in February last year, under which the apex bank would fix the policy interest rates and try to keep inflation below 6%. The central inflation target is one of the many inflation-fighting policies supported by RBI Governor Raghuram Rajan, whose tenure will end next month.

The government has also started the the process of setting up a monetary policy committee that will be given the task of fixing the interest rate, reported PTI. The rates will be based on inflation targets set up by the government and the RBI. A senior government official told Reuters that candidates were being shortlisted for the six-member committee, but added that it will not be formed before the upcoming policy review meet on August 9.