The Reserve Bank of India (RBI) is open to the idea of using the Consumer Price Index (CPI) inflation for providing inflation protection in Inflation Indexed Bonds (IIBs). “New instruments will be issued down the line next year and if the CPI stabilises we may move over to that,” said Rajendra Kumar, deputy general manager of RBI in a conference call on Monday.
Currently the Wholesale Price Index (WPI) inflation will be issued in the first tranche of bonds which will be auctioned on June 4. There is a gap in the WPI and CPI numbers. Wholesale Price Index inflation for April came at a low of 4.9 per cent while Consumer Price Index inflation moved to 9.4 per cent. The RBI will also release an FAQ on these bonds this week which will provide more details on these bonds.
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