---
title: "Monetary Policy Framework Agreement 2015 — Definition"
description: "The Monetary Policy Framework Agreement 2015 established flexible inflation targeting as the RBI's primary goal."
url: "https://modeldiplomat.com/learn/glossary/monetary-policy-framework-agreement-2015"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The Monetary Policy Framework Agreement 2015 is a formal accord between the Government of India and the Reserve Bank of India making flexible inflation targeting the primary objective of monetary policy.
- What inflation target did the Monetary Policy Framework Agreement 2015 set?
- How does the framework define a failure to meet the target?
- How is the 2015 agreement related to the Monetary Policy Committee?
- Was the Monetary Policy Framework Agreement given statutory backing?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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## Timeline

1. 20 February 2015

   The Monetary Policy Framework Agreement (MPFA) was signed on between the Government of India, represented by the Ministry of Finance, and the Reserve Bank o…

2. 5 August 2016

   The Finance Act, 2016 amended the RBI Act to insert Section 45ZA, under which the Central Government, in consultation with the RBI, notified the 4 percent ta…

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On 20 February 2015, RBI Governor Raghuram Rajan and the Ministry of Finance signed the Monetary Policy Framework Agreement, committing the RBI to hold CPI inflation at 4 percent with a 2–6 percent tolerance band.

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