CURRENT AFFAIRS

Detailed explanation-1: -In case of failure to maintain the inflation target for three consecutive quarters, the central bank, under section 45ZN of the RBI Act, is required to submit a report to the government explaining the reasons and spelling out the remedial actions it would be taking to check the price rise.

Detailed explanation-2: -As per the new framework, the central government, in consultation with RBI sets: (i) an inflation target, and (ii) an upper and lower tolerance level for retail inflation. The target has been set at 4%, with an upper tolerance limit of 6% and a lower tolerance limit of 2%.

Detailed explanation-3: -The RBI has been tasked to ensure that retail inflation remains at 4% with a margin of 2%. However, external factors have led retail inflation to remain above the upper tolerance limit for 11 months in a row. In November 2022, the retail inflation came below the 6% level and declined further in December at 5.72%.

Detailed explanation-4: -Inflation targeting is a central banking policy that revolves around adjusting monetary policy to achieve a specified annual rate of inflation. This is known as the target rate, which is normally set at around 2% to 3%.

Detailed explanation-5: -The Monetary Policy Committee The MPC determines the policy repo rate required to achieve the inflation target. The MPC is required to meet at least four times in a year.