In the meantime, the game of “follow the leader” will commence. This has been evident in the country of India where Rajan served as former governor of the Reserve Bank with similar rate hikes mirroring the Fed.
Source: tradingeconomics.com
Rajan does foresee a scenario that gives the Fed pause with respect to raising rates for the rest of 2018 and beyond. If the trade wars between the United States and China reach fever pitch levels, the trajectory towards higher rates could get obstructed.
“Of course, if there is a serious problem in emerging markets, if for example, if the trade spat gets much more violent in its ramifications, I think then the Fed may reconsider,” Rajan added.
Related: Interest Rate Policy After September Hike Uncertain
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