The central bank’s meeting is primarily to discuss and draft an explanation to the government on the failure to adhere to the inflation target for three consecutive quarters.
Besides, the discussion in the meeting will be unknown as the central bank is not expected to release an official statement.
Speaking at a banking summit on Wednesday, Governor Shaktikanta Das said that the central bank doesn’t have the authority to make the letter public.
Against RBI’s targeted range of 2-6%, domestic consumer price inflation averaged 6.3% in January-March, 7.3% in April-June, and 7.0% in July-September, indicating the central bank’s failure in its inflation mandate.
“RBI’s Monetary Policy Committee’s unscheduled meeting this week is unlikely to spring a surprise with an off-cycle rate hike, even though it comes a day after the Federal Reserve’s policy decision, and as unseasonal rains that have damaged crops intensify the inflationary pressure on the Indian economy,” said Rahul Chander, MD and CEO, LivFin, a fintech non-bank finance company.
The central bank is widely expected to take stock of the factors that resulted in a failure in achieving the target. The explanatory note will go to the Parliament, which may be discussed during the winter session.
Caution prevailed in equity as well money markets ON Wednesday, which reflected in prices, but this was largely because investors worldwide are awaiting US Fed’s policy action and outlook on future rate hikes later today.
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