Uday Kotak thinks central banks will hike rates for longer

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.
A similar domino effect was reflected with other central banks, as the Reserve Bank of India (RBI) hiked its repo rate by a similar 25 bps, taking its current repo rate to 6.75 percent.

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.