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RBI Inflation-Failure Report: Case for Making It Public

4 November 20251 min read
BANKING & FINANCERBIInflation-FailureReport: Case forMaking It Public4 November 2025safalsetu.com

Why in the news

With the inflation-targeting regime heading for review, attention has turned to one openness gap: the RBI’s report on its 2022 miss was never released.

Key facts

  • Review of the flexible inflation-targeting regime is due by March 2026.
  • Broad agreement on the 4% target with a +/-2% band (2-6%).
  • Trigger: inflation outside the band for three consecutive quarters; this happened in 2022.

Section 45ZN, RBI Act, 1934

The RBI must tell the Central Government why it failed, what remedies it proposes, and how long the return to target will take. The law does not demand publication.

Arguments for publishing

  • Spirit of the regime: withholding clashes with its transparency.
  • Accountability: MPC calendars, vote disclosures and half-yearly Monetary Policy Reports are already open.
  • Global practice: the Bank of England and Reserve Bank of New Zealand release such explanations.
  • Markets: supporters say clarity reduces uncertainty, despite fears of volatility.

Exam angle

  • Provision: Section 45ZN; report goes to the Centre.

Test yourself

1. Which section of the RBI Act, 1934 requires a report to the Centre when the inflation target is missed?

Section 45ZN covers the failure report after three quarters outside the band.

2. After how many consecutive quarters outside the tolerance band must the RBI report to the government?

The RBI must report when inflation stays outside 2-6% for three consecutive quarters.

3. Which pair of central banks is cited as publishing inflation-failure explanations?

The notes cite the Bank of England and RBNZ as examples.

This topic is part of Daily Current Affairs 4 November 2025 (15 topics).

All topics of the dayDay quizNovember 2025

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