RBI MPC Meeting: Last evening the news came that on November 3, the Reserve Bank of India will organize a meeting of the Monetary Policy Committee, which will be an off cycle meeting i.e. it is not a predetermined meeting. RBI has called this meeting at a time when it has failed to achieve its inflation target for the last three quarters i.e. 9 months.
Inflation bomb in the country, RBI’s puffed up!
Although the scheduled meeting of RBI is scheduled on 5-7th of December, but the whole focus of the unexpected meeting convened a month before that is the rising inflation rate in the country. It has also been made clear in the statement issued by the RBI that in this meeting the members of the MPC will discuss the reasons for the inflation rate in the country. RBI will focus on those issues which have been the reason behind the inflation rate not coming under control.
Government will have to report
In a special meeting of the MPC on November 3, a report on the failure to keep inflation below 6 per cent for three consecutive quarters will be prepared, and the report will then be submitted to the government. In a statement issued yesterday, RBI said that a special meeting of the Monetary Policy Committee (MPC) has been convened on November 3 in accordance with the provisions of Section 45ZN of the RBI Act.
Why RBI had to call a special meeting
This section of the RBI Act provides that in case of failure to keep inflation within the limits set by the government for three consecutive quarters, the central bank has to report it to the government. The government has given a target of limiting inflation to four percent (two percent more or less) to the country’s central bank RBI, but despite all the efforts, the RBI failed to keep the inflation rate within six percent.
Since January this year, the inflation rate in the country has remained consistently above six percent. In the last retail inflation data, retail inflation stood at 7.41 percent in September. Thus the RBI has failed to achieve its inflation target for three consecutive quarters. Therefore, according to the statutory provisions, he will have to report on this to the government.
The six-member MPC, headed by RBI Governor Shaktikanta Das, will prepare a special report to be submitted to the government. In this report, the reasons will be mentioned due to which the RBI has failed to achieve the set inflation target. Apart from this, what are the efforts being made to bring down the inflation rate in the country, their details will also be given in this report.
report will not be made public
After the last monetary review meeting of the MPC, RBI Governor Shaktikanta Das had said that the information submitted to the government in case the RBI misses the inflation target is considered exclusive and will not be made public.
An off-cycle meeting was also held in May – rates were increased
The consumer price index (CPI)-based retail inflation rose to 7.41 per cent in September and the retail inflation rate has remained above the RBI’s tolerance limit for the past three quarters. Inflation concerns had earlier forced the RBI’s rate setting panel to hike the repo rate during a meeting held in May this year, which was also an off-cycle meeting.
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