Mumbai: India’s central bank will not immediately release details of a report to the government explaining why it has failed to meet its targets for inflation, Governor Shaktikanta Das said.
The Reserve Bank of India’s monetary policy committee (MPC) will meet on Thursday to discuss its first ever inflation target miss, which has come amid an upsurge in inflation globally due to fallout from the war in Ukraine.
The committee, set up in 2016, is mandated to keep inflation within 2 percentage points on either side of its 4% target. Failure to do so for three straight quarters requires the bank to give an explanation to the government.
Das said on Wednesday that a letter to be sent to the government after the Nov. 3 special meeting will not be made public because the bank does not have the authority to release it.
However, he added he expected the contents will be made public eventually.
“It’s a report sent under a law, I don’t have the privilege, the authority or the luxury to release a letter like this,” Das said.
September retail inflation quickened to 7.4%, the ninth straight month that it has remained above 6%.
The RBI has raised interest rates by a total 190 basis points since May but inflation remains stubbornly high.
Das said that he expects inflation to moderate, adding that curtailing price pressures sooner would have resulted in very high costs for the economy.
He also said that RBI is monitoring the impact of past measures on price trends and its policy will balance the demand situation in the country.
The governor also said the pace of foreign exchange outflows had moderated and the recent strain on liquidity is likely to be transitory. He said the central bank would ensure there was enough liquidity to meet the needs of the economy’s productive sectors.
Though currently showing a marginal surplus, India’s banking system has suffered a deficit in liquidity for the past couple of weeks, and traders expect tight conditions to prevail.
The deficit had reached to near one trillion rupees towards the end of October, the most in the last 42 months.
(Additional reporting by Aftab Ahmed; Editing by Tom Hogue, Kim Coghill and Simon Cameron-Moore)
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