The Reserve Bank of India (RBI) has scheduled a special meeting of its monetary policy committee (MPC) on 3 November where they will discuss their reply to the government explaining why they failed to hold inflation within the mandated range of up to 6% for three straight quarters.

This is for the first time since its constitution in 2016 that the MPC is meeting for such a purpose. The six-member MPC usually meets to decide whether or not to raise interest rates.

Earlier, the RBI Governor Shaktikanta Das had said that the central bank will not make the report public.

As per the RBI Act, the central bank has to submit an explanatory report to the government in case the inflation target is not met for three consecutive quarters. The RBI also has to detail the corrective actions it plans to take to check inflation.

This will be the MPC’s second off-schedule meeting. In May, it had met to raise interest rates amid rising inflation.

In its last meeting on September 28-30, the MPC increased the policy repo rate by 50 basis points to 5.9%. The next slated meeting, the last this calendar year, was to be held on December 5-7.

India’s inflation has been climbing and touched 7.41% in September, almost making it certain that the RBI would go for a further interest-rate hike in its next policy meet in December. 

“Under the provisions of Section 45ZN of the RBI Act 1934... an additional meeting of the MPC is being scheduled on November 3, 2022,” the RBI said in a statement on Thursday.

This section deals with the failure to meet the inflation target, which is 4% with a band of +/-2%. 

Retail inflation has been above the 4%-6% mandated target band since January. 

In order to contain inflation, the RBI has hiked the policy repo by 190 basis points this year to take the repo rate to 5.9%.