Uday Kotak, CEO of Kotak Mahindra Bank, has shared his conviction that interest rates are poised to increase and stay elevated for an extended period. He took to Twitter to make the statement and pointed out that central banks across the world are in the process of implementing more rate hikes. He also noted that global central bank balance sheets have experienced huge losses as a result of buying long-term bonds and printing money, and that the sovereign will eventually be responsible for these losses.
The CEO of Kotak Mahindra Bank previously alerted India to three risks: persistent inflation, unpredictable behavior from Russia, and China overtaking the rest of the world.
Kotak highlighted that there are signs of sticky inflation in the US and that more interest rate hikes are likely in the future. He also drew a comparison to airplane turbulence and urged everyone to “fasten seat belts worldwide”.
The Federal Reserve, in early February, raised its benchmark interest rate by 25 basis points or 0.25 percent, bringing it to 4.75 percent. This indicates that the hiking cycle may soon come to an end. Similarly, the Reserve Bank of India (RBI) raised its repo rate by 25 bps, taking it to 6.75 percent.
Kotak’s comments suggest that the era of low-interest rates may soon be coming to an end, and that interest rates are likely to stay high for a longer period of time.The effect of this on the worldwide economy and financial markets is yet to be determined.
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