homeeconomy NewsInflationary concerns in India could trigger near term rate hikes by RBI, says Arvind Sanger
Inflationary concerns in India could trigger near-term rate hikes by RBI, says Arvind Sanger
In an interview with CNBC-TV18, Arvind Sanger, Managing Partner of Geosphere Capital Management, expressed his views on the potential impact of inflation on India's monetary policy.
As inflation continues to harden, the RBI may resort to near-term rate hikes to maintain price stability. However, despite these concerns, emerging markets like India are expected to remain attractive to investors seeking growth opportunities.
In an interview with CNBC-TV18, Arvind Sanger, Managing Partner of Geosphere Capital Management, expressed his views on the potential impact of inflation on India's monetary policy. Sanger highlighted the possibility of near-term rate hikes by the Reserve Bank of India (RBI) should inflationary pressures persist. He also discussed the ongoing trend of capital flowing into emerging markets, including India, despite the prevailing uncertainties.
According to Sanger, the hardening of inflationary pressures in India has become a growing concern for policymakers. As prices of essential goods and services rise, inflation can erode consumers' purchasing power and create economic instability. In response, central banks often resort to tightening monetary policy by raising interest rates to curb inflation.
While talking about rate hikes, he emphasized that if inflation continues to harden in India, it may prompt the RBI to implement near-term rate hikes. By increasing interest rates, the RBI aims to reduce borrowing and spending, which can help contain inflationary pressures. However, such rate hikes can also impact various sectors of the economy, including consumer spending, investment, and overall business sentiment.
“Is there a risk that Indian inflation could start to harden a little bit? It is not a central case, but it is something worth keeping an eye on because that would be contrary to the trends going on globally. And it's something that could cause some near-term nervousness about RBIs ability to cut rates and maybe even have it go the other way if things get out of control,” said Sanger.
Despite the potential for rate hikes, Sanger believes that emerging markets, including India, will continue to attract capital inflows. The search for higher yields and investment opportunities in countries with robust growth prospects has driven investors towards emerging economies. India, with its vast consumer market, expanding middle class, and ongoing structural reforms, remains an attractive destination for capital investment.
Sanger acknowledged the challenges posed by inflationary pressures but expressed optimism about India's ability to sustain its growth trajectory. He emphasized the importance of maintaining a balance between managing inflation and supporting economic expansion. The government's ongoing efforts to implement structural reforms and boost productivity can contribute to India's long-term growth potential.
For more details, watch the accompanying video
(Edited by : C H Unnikrishnan)
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