RBI: RBI’s special meeting concluded, it will report to the government why inflation is not under control

Mumbai : Reserve Bank’s Monetary Policy Committee (RBI MPC) met to discuss and prepare a report to be sent to the central government. The report will explain why it has failed to keep retail inflation below the satisfactory threshold of six per cent for three consecutive quarters since January this year. p>Article 45ZN of the RBI Act, 1934, Rule 7 of the RBI MPC and the Monetary Policy Procedure Regulations, the MPC met separately on 3 November 2022 to discuss the report by the central banks. It will send the reply to the Government as per the provisions of the Monetary Policy Procedure Regulations, 2016.

Why is the RBI bound to reply to the Government?

The section of the RBI Act provides that the Govt. In case of failure to keep inflation within the prescribed limits, the central bank should inform the government about it. RBI Governor Shaktikanta Das presided over the meeting of the committee, the 6-member MPC met under the chairmanship of Das. All MPC members including Michael Debbrat Patra, Rajeev Ranjan, Shashank Bhide, Ashima Goyal and Jayant R. Verma was also involved.

Formation of MPC in 2016

For the first time since the formation of MPC six years ago, RBI will prepare a report and submit it to the government. This report has to be submitted if the RBI is not able to keep inflation within the prescribed limits for nine consecutive months and hence the MPC was established in 2016 as a systematic framework for monetary policy formulation. Since then, the MPC has remained the highest decision-making body on policy interest rates. Under the MPC framework, the government entrusted the RBI with the responsibility of ensuring that inflation remains below four percent (with a margin of two percent).

Inflation remains above 6 percent

 

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