The RBI has decided to hold an off-cycle meeting of its rate-setting panel on November 3 to discuss its response to the government on why it has missed its inflation target for three quarters in a row.
The special meeting, which will happen a month before the Reserve Bank of India delivers its next interest-rate decision, will also act as a forum to decide on remedial actions and an estimated time period within which the inflation target can be achieved.
"One of the external member(s) of the RBI monetary policy committee has emphasised on reducing the inflation below 6 per cent as soon as possible. So, they might sit and discuss future courses of action," Jigar Trivedi, a senior currency and commodity analyst at Reliance Securities, told DH on Thursday. Trivedi dismissed the chances of another off-cycle rate hike.
"Very unlikely. That could send wrong signals to the market," he said.
In its previous meeting on September 30, the RBI's rate-setting panel had hiked the repo rate by 50 basis points to 5.90 per cent to arrest stubborn inflation in Asia’s third-largest economy. RBI has increased its key lending rate by 190 basis points since May in four tranches to tame rising prices.
The consumer price index (CPI) inflation for September stood at 7.41 per cent, staying above the government's 6% upper limit since January 2022, driven largely due to global factors including recessionary fears in the US and the Russian-Ukraine conflict. Moreover, in five of the last nine months, it has remained above the 7 per cent mark. The government had set an inflation target of 4 per cent with a two-percentage-point leeway on either side.
"Under the provisions of Section 45ZN of the Reserve Bank of India (RBI) Act 1934... an additional meeting of the MPC is being scheduled on November 3, 2022," the central bank said in a statement on Thursday. That section deals with failure to maintain the inflation target.
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