RBI's monetary policy panel to meet on Nov 3

Mumbai, October 27

The RBI will hold a special meeting of its rate-setting committee 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 since January.

The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das will prepare the report on reasons for failure to meet the inflation target and the remedial measures the central bank is taking to bring down prices in the country.

“Under the provisions of Section 45ZN of the Reserve Bank of India (RBI) Act 1934… an additional meeting of the MPC is being scheduled on November 3, 2022,” RBI said in a statement on Thursday. Section 45ZN of the RBI Act deals with failure to maintain the inflation target.

The RBI Act mandates that in case the inflation target is not met for three consecutive quarters, the central bank has to submit a report to the government explaining the reasons and detail the remedial actions it will be taking to check the price rise.

This will be the first time since the monetary policy framework came into effect in 2016 that RBI will have to explain its actions to the government.

As per the mandate given to RBI by the Union government, the central bank is required to ensure retail inflation remains at 4% with a margin of 2% on either side.

Inflation had overshot the target for over three quarters during the pandemic also but the RBI did not have to provide an explanation to the government. It was because of a technical shortcoming in data collection as data was collected without visiting mandis because of pandemic-related curbs. The retail inflation based on CPI has remained above 6% since January 2022. — PTI

Unscheduled meeting

• This will be the first time since the monetary policy framework came into effect in 2016 that RBI will have to explain its actions to the government
• As per the mandate given to RBI by the Centre, the RBI is required to ensure retail inflation remains at 4% with a margin of 2% on either side