RBI misses for the first time to deliver its contracted inflation target

Mumbai: The Reserve Bank of India failed to deliver on its contracted inflation target for the first time, started fiat digital currency pilot and finally saw its efforts to improve bank balance sheets see fruition in 2022, making it a mixed year for the central bank.
With inflation ebbing into the target band, focus is likely to shift to helping economic growth in the new year, especially given the lagged impact of 2.25 per cent in rate hikes since May 2022, is likely to hamper GDP expansion.
The big story of 2022 happened on October 12, when official data showed that headline inflation was above the 6 per cent mark — the upper end of the tolerance band set for the central bank — for nine consecutive months. It triggered a letter from RBI to the government enumerating the reasons for the miss and also when it sees the price rise coming to the 4 per cent mark.
A bulk of the blame for persistent inflation was placed on the deteriorating global situation following the Russian invasion of Ukraine in late February, which led to a huge spike in the commodity prices, especially crude which India imports.
The Indian situation on inflation was not as bad as many other countries experiencing record price rise, which served as a consolation. The year started off with RBI Monetary Policy Committee (MPC) going for a prolonged status quo, till it delivered the surprise after an unscheduled meeting on May 4, by hiking the repo rate by 0.40 per cent.
Many blamed RBI for being behind the curve and acting late, but the central bank defended the actions by asserting that it was not behind the curve.