This will be the first time since the Monetary Policy Framework came into force in 2016 that the RBI will have to report to the government the details of its actions. Under the responsibility given to the Reserve Bank by the Central Government, the RBI has been given the responsibility to maintain retail inflation at four percent with two percent fluctuations. Now the secretary of the Monetary Policy Committee (MPC) will have to convene a separate meeting of the MPC to discuss this under the RBI Act and prepare the report and send it to the central government.
report will remain confidential
The MPC bi-monthly monetary policy review primarily looks at retail inflation. The Monetary Policy Committee meeting may take place a day after Diwali as senior central bank officials are currently in the US to attend meetings of the International Monetary Fund and the World Bank. Last month, RBI Governor Shaktikanta Das had said that the report to the Center on default in inflation target is a confidential matter between the two parties and will not be made public.
Retail inflation has remained above 6 per cent since January 2022. It stood at 7.41 per cent in September. If inflation remains above or below the lower limit on an average for three consecutive quarters, it will be considered as a lapse in the responsibility of RBI to keep inflation within the prescribed range. The central bank has been increasing the policy rate since May to bring inflation under control. It has so far raised the policy rate by 1.9 per cent, taking the repo rate to 5.9 per cent. Inflation remained outside the target range for more than three quarters in the initial months of the pandemic. But due to technical deficiencies in data collection due to ‘lockdown’, the RBI had not to report at that time.
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