Calling monetary policy stance to target inflation “credit positive” Moody&’s Investors Service on Sunday said that it will help keep price rise pressures under check.
“The inflation target is a credit positive,” Moody&’s senior VP Marie Diron said, adding that it is “re-affirmation of the commitment to keep inflation at moderate levels”.
"The changes to the monetary policy regime of the last two years mark is a step towards greater policy transparency and predictability," Diron said.
"At a time when large increases in wages are implemented in the public sector, moderate inflation expectations could help prevent spillovers to wage and price settings in other, sectors," she added.
The Union government, in consultation with the Reserve Bank of India, has notified the five-year inflation target at 4 per cent, with an upper and lower tolerance limit of 2 per cent.
Talking about macroeconomic stability, Diron said that "sustained moderate inflation would contribute to macroeconomic stability and help prevent a repetition of the short marked cycles of the past".