RBI meets to discuss inflation — No rate action likely, say economists

Speaking to CNBC-TV18, Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India, said, “Whenever an unscheduled meeting takes place, and if it is given under Section 45ZN and Regulation 7, I think it is clear that the purpose is to define and draft a report to say that why the inflation target may not have been achieved and what is the remedial action."

"We should take this as an ordinary meeting, where the outcome will be purely a discussion of inflation, not meeting the target,” he said.

The RBI's ideal objective is to get inflation to four percent but as it is flexible inflation targeting, the target is over a business cycle.

“The RBI is telling us their inflation forecast for FY24 (April 2021-March 2023) is 5.2 percent so clearly, the target will not be reached,” said Sajjid Chinoy, Chief India Economist at JPMorgan.

Chinoy believes that the RBI meeting after FOMC is purely coincidental.

“Regulation 7 says that the Secretary shall convene a meeting of the MPC under normal process to discuss the report that has to go to the government. That report has to go within one month when the inflation target is deemed to fail. That means the report has to go before November 12 and therefore, I think this is largely a formality given the timing that the MPC is meeting on the third of November and has to send that report before the 12," he said.

"The fact that it is happening the morning after the Fed I believe is purely coincidental,” Chinoy added.