Known unknowns

Global developments need careful monitoring

At a time when the Indian economy and financial markets are dealing with uncertainties at multiple levels, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) did well to not surprise the market last week. The rate-setting committee increased the policy repo rate by 50 basis points to 5.9 per cent. The standing deposit facility and marginal standing facility rates were adjusted accordingly. Given the inflation situation, the rate will need to be increased further. To what extent the MPC will raise it in the current cycle will depend on a variety of factors, including developments in