18 Sep 2026

tolerance band

The range around an inflation target within which the central bank need not act

The margin either side of an inflation target, such as India's 2 to 6 % around a 4 % target.

Some central banks are given a band rather than a point. The Reserve Bank of India targets 4 % with a band of two points either side; if inflation stays outside it for three quarters the bank must account for the failure. The upper edge of such a band is a natural threshold for an inflation indicator.

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RBI · threshold

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