RBI to hold additional MPC meet on November 3, inflation on agenda
Sources privy to the developments told CNBC-TV18 that the meeting is purely to discuss the MPC's response on inflation. As per Section 45ZN of the RBI Act 1934, the RBI must explain to the government why the CPI target of 4 percent was missed for three straight quarters.
The Reserve Bank of India (RBI) on Thursday, October 27, announced that it will hold additional meeting of the six-member rate-setting monetary policy committee (MPC) for FY2022 on Thursday, November 3, 2022.
Sources privy to the developments told CNBC-TV18 that the meeting is purely to discuss the response of the MPC to the government on inflation. As per Section 45ZN of the RBI Act 1934, the RBI must explain to the government why the CPI target of 4 percent was missed for three straight quarters.
According to RBI, MPC's fifth and next meeting is scheduled for December 5-7, 2022.
"Under the provisions of Section 45ZN of the Reserve Bank of India (RBI) Act 1934, read along with the Gazette notifications S.O.2215(E) dated June 27, 2016 and S.O.1422(E) dated March 31, 2021 and the Regulation 7 of the RBI Monetary Policy Committee (MPC) and Monetary Policy Process Regulation, 2016, an additional meeting of the MPC is being scheduled on November 3, 2022," the RBI said.
In order to control rising inflation, the RBI on September 30 raised the short-term lending rate for the third consecutive time by 50 bps to take the repo rate to 5.9 percent. Since May it has cumulatively increased the key interest rate by 190 basis points.
The RBI had raised the repo rate by 40 basis points in April and then effected 50 bps hikes each in the scheduled monetary policy reviews in June, August and September.
The MPC announces the bi-monthly monetary policy after deliberations on the prevailing domestic and economic situations. Headed by the governor, the committee has two representatives from the central bank and three external members. The central government has tasked the RBI to ensure that inflation remains at 4 percent with a margin of 2 percent on either side.
The Reserve Bank of India has also lowered the GDP (Gross Domestic Product) growth rate projection for the fiscal to 7 percent from its earlier estimate of 7.2 percent.
(Edited by : Shoma Bhattacharjee)
First Published: Oct 27, 2022 6:06 PM IST
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