Axis Bank CEO and Managing Director Amitabh Choudhary said on Tuesday that although the US Federal Reserve is working to lower interest rates in the near future, interest rates will rise rapidly after Donald Trump takes office as the 47th US president. He pointed out that there is a possibility of an increase in the
In an interview with Business Today, Chaudhry said, “The Fed was on the path to lowering interest rates, but what Donald Trump is saying now that he’s back in office, whether it’s raising trade tariffs or reducing the budget deficit.” Looking at what’s going to happen, I think the room for lower rates is shrinking rapidly, and as the budget deficit continues to rise, investors will probably be forced to raise rates. They will demand a higher price.”
He added that Europe not only has issues such as growth and immigration, but it is also a difficult proposition.
Regarding India, Chaudhary said the Indian government is doing a great job of cooperating with other countries and showing itself as a country that other countries need on their side.
“With respect to India, we are hopeful that the situation will ease over time.The biggest macros that have come and gone under the Trump administration will be very active over the next 12 to 18 months. So every time that happens, some kind of action will be taken.”It will have ripple effects on the US, India and the rest of the world, but India may have a great growth story, but market fluctuations will cause some problems.” may cause. ”
The US central bank lowered interest rates on December 19, 2024. But Federal Reserve Chairman Jerome Powell said further reductions in borrowing costs depended on continued progress in tackling persistently high inflation. Powell’s comments signaled that policymakers are beginning to consider the potential impact of significant economic changes under the Trump administration.
Chairman Powell’s clear warning of the need for vigilance going forward had a major impact on financial markets. That caused stock prices to fall, bond yields to rise and investors to adjust their expectations for future interest rate cuts.
To combat rising inflation levels, the Fed implemented a series of interest rate hikes in 2022 and 2023. The easing cycle began in September 2024 with a 0.5% cut in borrowing costs, followed by a 0.25% cut the following month.
The Reserve Bank of India (RBI) appears to have loosened its grip on the rupee, which has depreciated against the US dollar over the past month.
This change in approach marks a departure from the RBI’s earlier stringent measures aimed at stabilizing the value of the rupee. Until about a month ago, the Reserve Bank of India had been carefully monitoring and managing the rupee’s movements in order to prevent a significant rupee depreciation from September 2024 onwards.
Chaudhary spoke about the weak rupee and said the worst is over. “Over the past month or so, the RBI has loosened its grip on the rupee and that is the reason for the sharp depreciation of the rupee.Hopefully, we will see rupee stabilization from here on out… From here it will be a slow depreciation of the rupee. However, it is still difficult to predict.
After staying in the $84-$85 range for a long time, the rupee recorded its biggest single-day depreciation in nearly two years on January 13, dropping 66 paise against the US dollar to a record 86.70 rupee. The transaction closed at a low price. Since November 1, 2024, the rupee has depreciated by 2.6%.
