VENKATACHARI JAGANNATHAN

Chennai, Nov 30,2022:  The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is expected to meet soon to decide on the repo rate to contain inflation.

The MPC had met on November 3, to discuss what it would tell the central government on the reasons why it was not able to restrain the inflation.

As per the Section 45ZN of the RBI Act, when the RBI fails to meet the inflation target, it shall send a report to the Central government listing: (a) the reasons for failure to achieve the inflation target; (b) remedial actions proposed to be taken by it; and (c) an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions.

The proceedings of the said MPC meeting have not been made public even though the law provides to the contrary.

As per section 45ZK, the RBI shall publish, after the conclusion of every meeting of MPC, the resolution adopted by the said Committee.

Further as per the Section 45ZL of the RBI Act, the minutes of the MPC meeting has to be published on the 14th day after every meeting including:

(a) the resolution adopted at the meeting of the MPC;

(b) the vote of each member of the MPC, ascribed to such member, on resolutions adopted in the said meeting; and

(c) the statement of each member of the MPC under sub-section (11) of Section 45ZL on the resolutions adopted in the said meeting.

Be that as it may, Deepak Agarwal, CIO (Debt) Kotak Mahindra Asset Management Company said the average CPI in India for FY 24 is expected in the band of 5.00-5.25 per cent. Assuming 100 bps real rates, terminal repo rate in India could be about 6.25 per cent.

“We expect a 35 bps hike in the Dec 22 policy, along with a change in monetary policy stance from ‘withdrawal of accommodation’ to ‘neutral’ ” indicating further action to be data dependent,” Agarwal said.