RBI's monetary policy committee held an off-cycle meeting on Thursday, to discuss the unrelenting inflation and give a response to the govt on it. Why's the RBI is writing to the govt over inflation
Under Section 45ZN of the RBI Act, 1934, the central bank is required to write a letter to the Centre if it fails to maintain the inflation target
In September review, panel talked about aggressive monetary policy actions and stances across the world
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India's retail inflation stood at 7.41% in September, higher than the 2%-6% target zone for the ninth straight month
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To combat the cost of living crisis, the central banks of most countries have raised interest rates and curbed excess money supply
MPC may decide RBI's response to govt on the matter; Unlike earlier off-cycle meetings in which interest rate action was taken outside schedule without prior notice, this one was announced in advance
The announcement notifying an additional meeting of the MPC has been made as per Section 45ZI (4) of the RBI Act 1934, the RBI said on Thursday
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"As far as monetary policy is concerned, moderation in the core inflation should be the priority," Shashanka Bhide, an external member of the Reserve Bank of India's monetary policy committee, said
After recent downgrades, stocks comprising the country's benchmark Nifty Index are forecast to deliver around 15% higher income over the next 12 months than at the start of 2020
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Analysts say RBI is allowing the depreciation amid wider CAD and higher US interest rates
India's most hawkish rate-setter said the policy rate was reaching a level that allows past aggressive action to cool inflation without inflicting too much pain on the economy
The central bank looks to protect headline reserves, deter offshore/onshore arbitrage on Rs with buy-sell swaps in forex market