Mark Matthews, MD, Bank Julius Baer & Co, believes that the US Federal Reserve may not need to raise interest rates multiple times. According to him, it takes a while for interest rate hikes to filter through the economy. Infact, he doesn’t expect the rate hikes to be as much as what is being priced in.

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Highlighting the factors behind higher inflation, Matthews listed COVID-19 as a key factor. He said, “I do think that inflation will go down and we do not talk about COVID much anymore but it is the key reason why inflation is high; It is due to COVID that there are bottlenecks in the supply chains, causing prices to be high.”

Coming to the Indian market and the upcoming Union Budget, Matthews is of the opinion that the Centre's focus will be on divestment. He said, "I think the focus will be on divestment. A big pipeline of public companies can be divested out so I don't see why anything will change."

On the US stock markets, Matthews mentioned that the S&P 500 corrects every 18 months. He explained that S&P 500 corrected 10 percent in September of 2020 and has corrected 9 percent now. He is pretty sanguine about the correction in the market.

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He said, “We are all worried today. We are all thinking the Fed is going to raise a lot and what a disaster it is going to be. I highly doubt it. In a few months' time, we will really remember it; every 18 months thereabouts there is a correction, in other words, a drop of 10 percent or more in the S&P. So basically I am sanguine about it.”

Watch the video for the full interview.

First Published:Jan 27, 2022 10:43 AM IST