The Reserve Bank of India’s Monetary Policy Committee (MPC) met in an off-cycle meeting on Thursday, November 3, to discuss and draft the report to be sent to the Government by the central bank.

The meeting was held under the provisions of Section 45ZN of the RBI Act, 1934 and Regulation 7 of RBI MPC and Monetary Policy Process Regulations, 2016, the RBI said.  

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RBI’s meeting was chaired by Governor Shaktikanta Das and was attended by fellow MPC members Dr. Michael Debabrata Patra, Dr. Rajiv Ranjan, Dr. Shashanka Bhide, Dr. Ashima Goyal, and Prof. Jayanth R Varma.

The Reserve Bank will submit an official explanation to the central government as to why it failed to keep inflation within the tolerable target band of 2%-6% for three consecutive quarters since January this year.

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The retail inflation based on Consumer Price Index (CPI) has remained above 6% since January 2022. September inflation came in at a five-month high of 7.41%.

India’s retail inflation in January this year stood at 6.01%, in February 6.07%, and at 6.95% in March.

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At the start of this fiscal year in April 2022, India’s CPI inflation reached an 8-year high of 7.79%. In a surprise off-cycle meeting, RBI announced a 40 basis point hike in repo rate on May 4, 2022. This was just the beginning of the rate hike cycle and RBI was not alone to do so as many other major central banks like the US Federal Reserve, and European Central Bank also took a hawkish stance.

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Since May 2022, RBI has raised the repo rate by 190 basis points in consecutive policy meetings. Now the repo rate stands at 5.90%.

Retail inflation slipped to 7.04% in May, 7.01% in June, and 6.71% in July.

However, it rose marginally to 7% in August and 7.41% in September.

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The September retail inflation data released on October 12 confirmed the Indian central bank had failed to meet its mandate for nine straight months and three consecutive months. As per the law, RBI must now submit a report to the central government explaining why it failed to contain inflation, the remedial actions it proposes to take, and the period within which inflation returns to target.

According to the original schedule, the MPC’s next policy meeting is scheduled between December 5-7.