Uday Kotak, the founder of Kotak Mahindra Bank, expressed concerns over the recent surge in US inflation numbers, predicting global turbulence and dismissing the likelihood of an immediate rate cut by the Federal Reserve. He highlighted the impact of rising petrol and shelter costs, emphasizing that these factors could keep interest rates elevated not just in the US but also globally, including India.
The US Labor Department’s Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose by 0.4% in March, exceeding predictions and pushing the 12-month inflation rate to 3.5%. This unexpected acceleration in inflation dampened hopes for a June interest rate reduction by the Federal Reserve, with Uday Kotak suggesting that any rate cuts by the Fed might be postponed until closer to the US Presidential elections, if they occur at all.
Following the release of the inflation data, US stocks experienced a significant drop, with the Dow falling by over 500 points and the S&P 500 and Nasdaq Composite also seeing declines. Various experts commented on the situation, with Greg McBride from Bankrate indicating that a June interest rate cut is unlikely, and Tyler Schipper from the University of St. Thomas noting disappointment over core inflation coming in higher than expected.ήGovernor Michelle Bowman even suggested a potential increase in interest rates if the data does not align with expectations.