Reserve Bank of India (RBI) Governor Shaktikanta Das on the sidelines of the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington, US, on Friday at the Peterson Institute for Economics (PIIE) event on October 25, 2024.
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The Governor of the Reserve Bank of India said that central banks have successfully achieved a soft landing during the “sustained and unprecedented shock”, but the risk of a resurgence of global inflation and slowing economic growth remains.
Reserve Bank of India (RBI) Governor Shaktikanta Das told the CNBC-TV18 Global Leadership Summit in Mumbai, India, on Thursday that despite conflicts, geopolitical tensions and heightened volatility, But in recent years, the monetary policies of global central banks have basically performed well.
“A soft landing has been ensured, but the risk of inflation – as I said to you here today – the risk of a resurgence of inflation and slower growth remains,” Das said.
“Headwinds from geopolitical conflicts, geoeconomic fragmentation, commodity price volatility and climate change continue to increase.”
Das pointed to several conflicts in global markets to underline his point, including the dollar’s appreciation even as the Federal Reserve cuts interest rates.
this dollar indexAs of 8:45 a.m. London time on Thursday, the yuan rose 0.2% against six major currencies, including the euro and yen, to 106.71, briefly touching its highest level since November.
US Dollar Index for the past 12 months.
It comes as investors and economists take a closer look at what President-elect Trump’s return to the White House could mean for U.S. interest rates.
The prospect of rising trade tariffs and tighter immigration policies during Trump’s second presidential term is expected to fuel inflation, which could hamper the Federal Reserve’s longer-term rate-cutting cycle.
The Federal Reserve cut interest rates for a second consecutive time earlier this month, as expected, and traders believe another rate cut in December is highly likely.
Different themes in the global market
“While many developed economies have embarked on an easing path through interest rate cuts, government bond yields are still rising, underscoring the fact that government bond markets are affected by a range of global and domestic factors that are far beyond It goes beyond simple policy adjustments.
“Second, despite the strength of the U.S. dollar and high bond yields, bond prices have not been affected. Gold and oil, two commodities that typically move in tandem, are now showing huge divergences,” he continued.
Third, there is also an interesting contrast between rising geopolitical risks and financial market volatility. While geopolitical tensions have steadily escalated in recent years, financial markets have shown considerable resilience in the face of increasing uncertainty. .
Das noted that global trade is expected to remain at high levels this year compared with 2023, despite challenges posed by tariffs, sanctions, import duties, cross-border restrictions and supply chain disruptions.
Talking about the Indian economy, Das said the country’s growth rate remains resilient and predicted inflation will slow “despite cyclical fluctuations.”
He added, “The Indian economy has performed well through prolonged periods of turmoil and has shown resilience in the face of emerging new challenges.”
On November 11, 2024, a worker loaded consumer goods onto a supply truck at the wholesale market in Kolkata, India.
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Speaking at another session of the CNBC-TV18 Global Leadership Summit, India’s Union Commerce Minister Piyush Goyal called on the country’s central bank to ease monetary policy to promote economic growth.
Asked whether the Reserve Bank of India should cut interest rates next month, Goyal replied: “I certainly believe they should cut interest rates. Growth needs further impetus. We are the fastest growing economy in the world, but we can do it better.
The Reserve Bank of India held its key interest rate steady at 6.5% in October while changing its policy stance to “neutral,” boosting hopes that the central bank may soon be ready to lower borrowing costs.
The Reserve Bank of India’s Das said he would not make any comment on interest rate changes in December.
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