Despite all the efforts of the Central Reserve Bank, inflation is not under control. Now the Reserve Bank will now have to give a report to the Central Government and explain the reason in detail. The report will have to explain why inflation could not be kept within the prescribed limits and what steps are being taken to bring it under control.

What is the rule: If the target set for inflation under the Reserve Bank Act has not been achieved for three consecutive quarters, then the RBI will have to report to the central government detailing the reason and the steps taken to check inflation. This will be the first time since the Monetary Policy Framework came into effect in 2016 that the RBI will be required to give full details of its actions to the government through a report.

Responsibility to control: Under the responsibility given to the Reserve Bank by the Central Government, the RBI has been given the responsibility of maintaining retail inflation at four percent with two percent fluctuations. Now the Secretary of the Monetary Policy Committee (MPC) will have to convene a separate meeting of the MPC to discuss this under the RBI Act and prepare the report and send it to the Central Government.

The Monetary Policy Committee meeting is likely to take place a day after Diwali as senior RBI officials are currently in the US to attend IMF and World Bank meetings.

Read this-Retail inflation continues, exceeds RBI limit for 9th consecutive month

How much is inflation? Retail inflation has remained above 6 per cent since January 2022. It stood at 7.41 per cent in September. The central bank has been increasing the policy rate since May to bring inflation under control. It has so far raised the policy rate by 1.9 per cent, taking the repo rate to 5.9 per cent.

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By Dipak

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