The governor of India's central bank issues a warning about the increasing possibility of global inflation reemerging.

• India's central bank chief believes that central banks have successfully orchestrated a gentle descent, but there is still a possibility of global inflation resurfacing, despite their efforts.
• At the Global Leadership Summit in Mumbai, India, on Thursday, RBI Governor Shaktikanta Das stated that central banks worldwide had generally executed their monetary policies effectively in recent years.
• Das stated that while a soft landing has been secured, there is still a possibility of inflation returning and slowing down growth, as he spoke to us today.

India's central bank chief warns that despite managing a soft landing through unprecedented shocks, there is still a risk of global inflation returning and economic growth slowing down.

At the Global Leadership Summit in Mumbai, India, on Thursday, Reserve Bank of India (RBI) Governor Shaktikanta Das stated that monetary policy from global central banks had largely "succeeded" in recent years, despite conflicts, geopolitical tensions, and higher volatility.

Das stated that while a soft landing has been secured, there is still a possibility of inflation reemerging and growth slowing down, as he spoke to us today.

"The geopolitical conflicts, geoeconomic fragmentation, commodity price volatility, and climate change are intensifying."

Das highlighted inconsistencies in global markets, such as the strengthening of the U.S. dollar despite the Federal Reserve's reduction of interest rates.

The dollar, which is compared to six other top currencies including the euro and yen, increased by 0.2% to 106.71 at 8:45 a.m. London time on Thursday, reaching its highest level since November last year.

What would be the impact of President-elect Donald Trump's return to the White House on U.S. interest rates?

If Trump is reelected, the possibility of increased trade tariffs and stricter immigration policies may lead to inflation, potentially halting the Fed's rate-cutting cycle in the future.

In line with expectations, the Fed delivered its second consecutive interest rate cut earlier in the month, and traders anticipate a good chance of another cut in December.

Divergent themes in global markets

According to Das, despite many advanced economies easing their rates through rate cuts, government bond yields are still rising. This highlights the complexity of Treasury markets, which are influenced by a range of global and domestic factors beyond just policy adjustments.

"Despite the robust US dollar and high bond yields, gold and oil prices, which usually move in unison, are exhibiting a significant divergence," he stated.

"An intriguing juxtaposition is emerging between the increasing geopolitical dangers and the fluctuating financial markets, as geopolitical tensions have been steadily intensifying in recent years, yet financial markets have demonstrated remarkable strength in the face of growing uncertainties."

Despite the challenges posed by tariffs, sanctions, import duties, cross-border restrictions, and supply chain disruptions, global trade is projected to remain higher this year compared to 2023.

Despite periodic humps, Das predicted that India's growth rate would remain resilient and inflation would moderate, turning to the country's economy.

The Indian economy has shown resilience in the face of constantly emerging new challenges, despite facing turbulence for an extended period.

At the Global Leadership Summit, Piyush Goyal, India's Union Minister of Commerce, urged the central bank to relax monetary policy to stimulate economic growth.

Goyal stated that he believes the RBI should lower interest rates next month to stimulate growth, as we are the world's fastest growing economy but have the potential to improve even further.

The RBI kept the key interest rate at 6.5% in October and shifted its policy stance to "neutral," increasing expectations that the central bank may soon reduce borrowing costs.

Das, the RBI governor, stated that he would abstain from making any remarks regarding a potential rate adjustment in December.