US developments vital to end uncertainty: Reddy

With the economic uncertainties looming largely on account of the US recession, RBI governor Y V Reddy noted that America held the key to these problems. 8220;There is a determination among policy makers to ensure early end to the uncertainty but a major share of comfort has to come from the US,8221; Reddy said. He believed that policy management becomes tough if fiscal deficit is high.

He said the apex bank had taken into account high oil and food prices in the January monetary policy. 8220;Much of what is happening was not entirely unanticipated but its magnitude is sometimes difficult to guess,8221; he said. 8220;By and large uncertainty exists and are continuing8230;as of now it is not clear when things will get normal or less abnormal,8221; he said. Reddy said policy management becomes tough if fiscal deficit is high and current account gap is big. On interest rates he said overnight rate corridor had served well.