The Reserve Bank of India (RBI) on Thursday announced an additional meeting of the Monetary Policy Committee (MPC) on November 3 to prepare a report for the government on why it failed to keep retail inflation below the target of 6% for three consecutive quarters.
The meeting will be convened under section 45ZN of the Reserve Bank of India Act, 1934 – the section under which the RBI is required to write the report in case the average inflation is more or less than the tolerance band of 4+/-2% for any three consecutive quarters.
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This is the first time that the RBI will be required to send the report to the central government since the MPC framework in 2016, as per reports.
RBI governor Shaktikanta Das, in the post-policy conference, had said that the Act does not specify the frequency of writing the letter. He had also said that the report will not be made public, as it is a privileged communication between the central bank and the government.
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The CPI inflation stood at 6.7% in July and then rose to 7.0% in August and 7.41% in September. In the monetary policy on September 30, the RBI projected CPI inflation at 6.7% in FY23, with 7.1% (Q2), 6.5% (Q3), and 5.8% (Q4), respectively.
The MPC is scheduled to meet between December 5-7 to discuss further monetary policy actions to rein inflation within the tolerance band. The RBI has raised the policy repo rates by 190 basis points to 5.90% since MPC’s previous additional meeting in May. The MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation remains within the target.