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RBI to throw surprise rate decision this week
November 02, 2022
The meeting on November 3 is about drafting an explanation for the central bank failing to adhere to the inflation target for three straight quarters.
“The unscheduled meeting on 3 Nov’22 recently announced is only a part of the regulatory obligation (for failing to bring inflation within mandated band for three straight quarters) and we do not believe any other agenda to be announced at this meeting, against the market expectation of a slim chance of rate hike as the meeting is scheduled a day after the Fed meets on 2nd Nov’22,” Soumya Kanti Ghosh, group chief economic adviser at State Bank of India, said in a research note.
India’s retail inflation surged to a five-month high of 7.4 percent in September, logging the third straight quarter where the average print stayed above the RBI’s tolerance ceiling of 6 percent and it has breached the medium-term target of 4 percent for three years.
As mandated by a law, the RBI will have to explain to the government the reasons for the failure to bring it within the 2-6% mandate and the remedial measures to fix it.
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