RBI panel meets to draft report for missing inflation target; no rate action

The RBI Act requires the central bank's MPC to report to the government reasons for failure to meet the retail inflation target and measures to bring it at 4 per cent with a margin of 2 per cent on ei

Published: 03rd November 2022 12:21 PM  |   Last Updated: 04th November 2022 08:01 AM   |  A+A-

RBI

Reserve Bank of India. (File Photo)

By Express News Service

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



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp