NEW DELHI: The unscheduled meeting of the Reserve Bank of India’s Monetary Policy Committee (MPC) as expected did not result in any rate action. The RBI in a statement informed the MPC discussed and drafted the report to be sent to the government to explain why it failed to maintain the inflation target.
The meeting was chaired by governor Shaktikanta Das and attended by all MPC members.
The meeting was called under Section 45ZN of the (RBI) Act, which specifically refers to failure to maintain inflation targets as the reason for calling a meeting. The content of the letter/report drafted by the MPC is not known. The RBI Governor on Wednesday said the letter would be made public but not immediately.
The meeting was called to draft an explanation why the MPC failed to meet inflation target for three successive quarters. The MPC has the mandate to maintain inflation target in the 2-6% range. Retail inflation in January-March 2022 quarter was 6.3%, April-June quarter was 7.3% and July-September 2022 quarter was 6.9% (Provisional).
There were speculations that the MPC meeting might lead to some rate action as the same was scheduled just a day after the US Federal Reserve meeting. The US Federal Reserve on Wednesday increased the interest rate by 75 bps to a target range of 3.75%-4%, the highest level since January 2008.
“Given the RBI has missed inflation target zone for three consecutive quarters and law requiring RBI to provide explanation to the government, we think RBI will not keep even tighter vigil and hence tighten policy to levels where it is sure of meeting inflation targets and not pause prematurely on hope,” says Akhil Mittal, senior fund manager, Tata Mutual Fund.
Shaktikanta Das chairs MPC meeting
RBI in a statement said the MPC discussed and drafted the report to be sent to the government to explain why it failed to maintain the inflation target. The meeting was chaired by governor Shaktikanta Das and attended by all MPC members