RBI's inflation targeting policy helps improve external competitiveness as inflation differentials with trading partners narrow Share Synopsis In a study Real effective exchange rate (REER) or inflation adjusted effective exchange rate into nominal exchange rates (NEER) and average relative prices shows that inflation differentials (between India and its major trading partners) have remained broadly stable in recent years, according to a research paper published in the Reserve Bank of India's latest monthly bulletin. Reuters MUMBAI: Inflation differentials between India and its major trading partners have declined and stabilised since the adoption of flexible inflation targeting framework indicating strength of India’s external competitiveness, according to research paper by the Reserve Bank economist published in RBI's latest monthly bulletin. The paper said that price stability should continue to be policy focus to maintain the country's external competitiveness.