Mumbai. The Monetary Policy Committee (RBI MPC) of the Reserve Bank of India met on Thursday to discuss and prepare the report to be sent to the central government. This report will explain why it has failed to keep retail inflation below the satisfactory threshold of 6 per cent for three consecutive quarters since January this year.
MPC will answer to the government on uncontrollable inflation
The central bank said in a statement, “The MPC met separately on November 3, 2022 to discuss the report that the Central Banks have under Section 45ZN of the RBI Act, 1934, Rule 7 of the RBI MPC and the Monetary Policy Process Regulations, 2016. Will send to the government under the provisions.
Why RBI is answering to the government
This section of the RBI Act provides that in case of failure to keep inflation within the limits set by the government, the central bank has to report to the government about it.
RBI Governor Shaktikanta Das chairs MPC meeting
The meeting of the 6-member MPC was chaired by Reserve Bank Governor Shaktikanta Das. All the members of MPC – Michael Debabrata Patra, Rajeev Ranjan, Shashank Bhide, Ashima Goyal and Jayant R. Verma also participated in this.
MPC was formed in the year 2016
For the first time since the formation of the MPC 6 years ago, the RBI will prepare a report and submit it to the government if it is not able to keep inflation within the prescribed range for 9 consecutive months. The MPC was set up in 2016 as a systematic framework for monetary policy formulation. Since then, the MPC has remained the highest decision-making body on policy interest rates. Under the MPC framework, the government had entrusted the RBI with the responsibility to ensure that inflation remains below 4 per cent (with 2 per cent variation).
Inflation remains above 6 percent
However, since January this year, inflation has remained consistently above 6 per cent. In September also, retail inflation based on the Consumer Price Index (CPI) was recorded at 7.41 percent. This means that inflation has remained above the satisfactory level of 6 per cent for nine consecutive months.
Tags: inflation, RBI, Shaktikanta Das
FIRST PUBLISHED : November 03, 2022, 18:39 IST