Duvvuri Subbarao has quite unexpectedly slipped a Rumsfeldian phrase into his first press statement as governor of the Reserve Bank of India.
In a comment on whether monetary policy will be tightened further, he said it would depend on several “known unknowns”, such as the impact of the earlier rate hikes and what happens in the global economy. Former US defence secretary Donald Rumsfeld had defined three variants of knowledge and ignorance—known knowns, known unknowns and unknown unknowns. Subbarao will have to watch out for the third type as well—the most likely source of such risks will arise because of shocks in the global financial system.
It is unrealistic to expect Subbarao to reveal his hand on interest rates or signal dramatic shifts in policy right away. But the tone of his first statement suggests continuity. And phrases such as “monitoring the situation” and “take action as appropriate” remind us of the cautious Y.V. Reddy rather than the belligerent Rumsfeld.