The Reserve Bank‘s rate setting panel met on Thursday to discuss and draft a report for the government on why it failed to keep retail inflation below the target of 6 per cent for three consecutive quarters since January this year.
“A separate meeting of the Monetary Policy Committee (MPC) was held on November 3, 2022 to discuss and draft the report to be sent to the Government by the Reserve Bank of India (RBI) under the provisions of Section 45ZN of the RBI Act, 1934 and Regulation 7 of RBI MPC and Monetary Policy Process Regulations, 2016,” the central bank said in a statement.
Section 45ZN of RBI Act deals with failure to maintain the inflation target.
The meeting was chaired by RBI Governor Shaktikanta Das and attended by all MPC members — Michael Debabrata Patra, Rajiv Ranjan, Shashanka Bhide, Ashima Goyal and Jayanth R Varma.
The RBI Act requires the central bank’s MPC to report to the government reasons for failure to meet the retail inflation target as well as measures to bring it at 4 per cent with a margin of 2 per cent on either side. The meeting was called under the provisions of Section 45ZN of the RBI Act 1934.
It was the first time since the monetary policy framework came into effect in 2016 that RBI had to give an explanation to the government.
The retail inflation based on Consumer Price Index (CPI) has remained above 6 per cent since January 2022. It was 7.41 per cent in September. The six-member MPC headed by Governor Das factors in retail inflation while deciding the bi-monthly monetary policy.