The RBI board also discusses functioning of various sub-committees of the central board, ombudsman scheme and activities of select central office departments
The 598th meeting of the Reserve Bank of India’s (RBI) central board of directors was held on Monday in Mumbai. During the meeting, which was chaired by RBI Governor Shaktikanta Das, the current economic situation, global and domestic challenges including the overall impact of current global geopolitical crises, were discussed.
“The board in its (598th) meeting reviewed the current economic situation, global and domestic challenges including the overall impact of current global geopolitical crises. The board also discussed the functioning of various sub-committees of the central board, ombudsman scheme and activities of select central office departments,” the RBI said in a statement on Monday.
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RBI Deputy Governors Mahesh Kumar Jain, Michael Debabrata Patra, M Rajeshwar Rao and T Rabi Sankar attended the meeting. Other directors of the central board — Satish K Marathe, S Gurumurthy, Revathy Iyer, Sachin Chaturvedi, Venu Srinivasan, Pankaj Ramanbhai Patel and Ravindra H Dholakia — were present at the meeting. Ajay Seth, secretary of the Department of Economic Affairs, also attended the meeting.
The Reserve Bank of India (RBI) will conduct an additional meeting of its Monetary Policy Committee (MPC) on November 3. In the meeting, the RBI will discuss its response to the government for failing to contain the retail inflation.
India’s retail inflation accelerated to a five-month high of 7.41 per cent in September. It was the ninth month that the Consumer Price Index (CPI)-based inflation has remained above the RBI’s upper tolerance limit of 6 per cent, and has risen despite the central bank’s efforts to curb it. The retail inflation had stood at 7.04 per cent in May, 7.01 per cent in June, 6.71 per cent in July, 7 per cent in August and now 7.41 per cent in September.
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The RBI has raised 190 basis points since May this year. In May, the central conducted its off-cycle monetary policy review to hike the repo rate to control inflation. It had hiked 40 basis points in the review.
The central bank conducted its last monetary policy last month (September 28-30), in which it raised the repo rate by 50 basis points. The repo rate currently stands at 5.90 per cent.
Rate hikes by the RBI going ahead are likely to be in baby steps and will be more focused on restraining the broadening of price pressures and/ or to pre-empt second-round effects. It is likely to be less aggressive, more data dependent and focused on anchoring inflation/ inflationary expectation, as opposed to the rate hikes which started in May 2022, to essentially align the policy rate to surging inflation, according to a report by India Ratings.
“Despite the 190-bp rate hike so far and tightening liquidity conditions, the RBI believes that the monetary policy is still accommodative because the nominal policy repo rate if adjusted for inflation trails the 2019 levels even now,” India Ratings said in the report.
