The Reserve Bank has scheduled a special meeting of the monetary policy committee (MPC) next month under a legal provision that requires it to give the government reasons for its failure in achieving the inflation target for three consecutive quarters, set at 4%, with a 2-percentage point tolerance threshold in either direction, and propose remedial action.
Data showed that the Consumer Price Index (CPI) in India stayed above the outer band of 6% since January. It touched a peak of 7.79% in April. The last recorded number was 7.41%, reported in September 2022. Economists say the MPC meeting is to finalise the contents of RBI’s explanation to the government.
Saugata Bhattacharya, Chief Economist, Axis Bank, said, “Inflation has clearly breached the outer limit, which has triggered the clause in the RBI Act that says the central bank has to write to the government within one month of the inflation number coming out, which is November 12.”
Indranil Pan, Chief Economist, Yes Bank, said, “I hope there is no change in the rates because it will cause unnecessary volatility in the market. There has been no drastic change in the economic environment since the last rate decision was announced on September 30 and although inflation is still high, there is no emergency - as in May.”
