Uday Kotak has a warning for you and perhaps the global economy needs to buckle up for a bumpy ride. The billionaire banker said the higher-than-expected US inflation may dent bets of Fed rate cuts and keep interest rate even for India elevated.
Uday Kotak, the founder of Kotak Mahindra Bank and former MD and CEO of the private lender, also flagged that China, the only wild card, is imploding economically.
Kotak expects US rate cut may be postponed closer to elections in the world’s largest economy. he also noted that brent crude has surged to $90 now while inflation levels are hotter than expected.
“US inflation is higher than expected. Postpones US rate cuts to later, closer to US Presidential elections, if at all. Brent oil now $90. Will keep rates higher for longer worldwide including India. Only wild card: China imploding economically. Get ready for global turbulence,” Uday Kotak wrote on X (previously Twitter).
The minutes of the latest US central bank policy review meeting revealed that Federal Reserve officials believed the key interest rate had likely reached its highest point. They indicated that it would be suitable to gradually ease the monetary policy stance at some point within the year if the economy evolved broadly as they expected.
Also, US central bank officials it’s not the right time to lower the main interest rate and they want to wait until they’re more sure that inflation is steadily heading towards the comfortable 2 percent mark before making any changes.
On Wednesday, data revealed that inflation in the US rose more than anticipated in March, dampening expectations of an imminent interest rate cut. Over the 12-month period ending in March, inflation surged by 3.5 percent compared with the previous year, marking the highest increase in approximately six months. This uptick followed a 3.2 percent rise in February.
Meanwhile, Brent crude futures have breached $90 a barrel level, while U.S. West Texas Intermediate crude futures were up above $86.24 a barrel.
Morgan Stanley has increased its forecast for Brent crude oil prices in the third quarter of this year by $4 per barrel to $94, citing geopolitical risks.
As for the interest rates in India, the Reserve Bank of India governor Shaktikanta Das on April 5 announced the Monetary Policy Committee’s decision to keep interest rates unchanged and left inflation and growth forecasts largely similar, even as it warned of growth risks.
