Pluralism in monetary policy framework
Pluralism is critical for all social sciences. Exploring multiple schools of thought can only improve the framework's accuracy and effectiveness
For a long time, India’s central bank and its monetary policy framework were a mystery. A year ago, that changed, with India formally adopting “flexible-inflation targeting" (FIT) in June 2016. A key feature of FIT is that monetary policy has an explicit inflation target in the long-term but medium-term inflation “projections" become the intermediate target. Thus, the success of FIT depends heavily on the accuracy of medium-term inflation forecasts.