Uday Kotak thinks central banks will hike rates for longer

Kotak Mahindra Bank MD Uday Kotak

Uday Kotak, Chief Executive Officer of Kotak Mahindra Bank, believes interest rates would get higher and stay for longer as central banks around the world work on more rate hikes, he said in a tweet.

“Global central bank balance sheets take huge losses as they bought long-term bonds and de facto printed money. Who pays? Sovereign. Signs of sticky inflation in (the) US. More interest rate hikes likely. And higher for longer. Remember airplane turbulence? Fasten seat belts worldwide,” Kotak tweeted.

The Federal Reserve on February 1 raised its benchmark interest rate by 25 basis points or 0.25 percent taking it to 4.75 percent, indicating towards the end of the hiking cycle.

Global central bank balance sheets take huge losses as they bought long term bonds and de facto printed money. Who pays? Sovereign.Signs of sticky inflation in US. More interest rate hikes likely. And higher for longer. Remember airplane turbulence? Fasten seat belts worldwide!

— Uday Kotak (@udaykotak) February 17, 2023

Market analysts are expecting another 25 bps rate hike by the RBI in April 2023.

Kotak also believes that the global central bank balance sheets are poised to take huge losses. Kotak tweeted that as the central banks bought long-term bonds and de facto printed money, their balance sheets will show huge losses. He also warned of sticky inflation in the US.

The veteran banker had earlier warned India of three risks in 2023 - sticky inflation, Russia’s unpredictable actions, and China becoming numero uno.

Also read: Uday Kotak flags three risks for India in 2023