Home / Industry / Banking /  Inflation note to govt will be confidential

The Reserve Bank of India (RBI) does not intend to make public its letter to the union government explaining why the central bank failed to meet the inflation target of 2-6% for three consecutive quarters.

Retail inflation has stayed above the central bank’s flexible target between January and August. It is not expected to turn benign in September either, and RBI therefore has to send a report to the government in October.

Under the monetary policy framework, RBI has to maintain the consumer price inflation in the 2-6% range, with the median target of 4%. Failing so for three consecutive quarters requires the central bank to write to the union government, citing reasons and suggesting remedial measures. “It is a privileged communication between the RBI and the government and so at this point of time, I cannot say whether it will be made public. From our end, we will not make it public…" said RBI governor Shaktikanta Das.

In May 2016, the RBI Act of 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework.

ABOUT THE AUTHOR

Shayan Ghosh

Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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