RBI schedules additional MPC meeting on November 3

The Reserve Bank of India on Thursday said that an additional meeting of its monetary policy committee (MPC) has been scheduled to take place on November 3.

"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 banking regulator says in a statement.

The additional meeting of the rate-setting panel comes at a time when the central bank expects headline inflation to ease from its September high, albeit stubbornly, on the back of easing momentum and favourable base effects.

India's retail inflation rate jumped to 7.4% in September from 7% in the month of August and 6.71% in July on the back of the high food prices in the country.

In the ongoing fiscal so far, the RBI has raised the repo rate by a cumulative 1.9% – 40 basis points in an off-cycle meeting in May, 50 bps in June and 50 bps August and 50 bps in September.

"There has also been an appreciable decline in WPI inflation in September on a broad-based easing across its constituents. Easing in international price pressures embodied in commodity and supply chain pressures are also likely to contribute to the softening of costs and prices," the central bank said in its 'State of the Economy' bulletin earlier this month.

While the persistence of headline CPI inflation above the tolerance band for three consecutive quarters (up to September) will trigger mandated accountability processes, monetary policy remains focussed on re-aligning inflation with the target, the RBI said.

"This may involve two milestones – first, bringing it within the tolerance band and second, lowering to around its mid-point. This trajectory will likely be gradual in view of the repeated shocks to which inflation has been subjected by both epidemiological and geopolitical causes, but the easing of inflation will inject confidence into both consumers and businesses, recharge animal spirits and investment and improve the international competitiveness of India’s exports," it said.

The fight against inflation will be dogged and prolonged, given the long and variable lags with which monetary policy operates, and fraught with uncertainties, said the banking regulator.

"Yet, if we succeed, we will entrench India's prospects as one of the fastest growing economies of the world enjoying a negative inflation differential with the rest of the world. This happy outcome will re-enthuse foreign investors, stabilise markets and secure financial stability on an enduring basis," it added.