2017 has started on a much stronger note compared to last year, says Dixit Joshi, managing director and head of fixed income at Deutsche Bank AG. He was speaking to BloombergQuint’s Menaka Doshi on the sidelines of the 47th World Economic Forum at Davos.
There may shocks along the way, though, with two upcoming elections in Europe – Germany and France – and the referendum in Catalonia, Joshi cautions.
Deutsche Bank expects the global economy to grow at around 3.6 percent this year, led by strength in the U.S. economy. This, in turn, means that U.S. interest rates will head higher over the next 12 months. “We are likely to see two rate hikes and there is the possibility of a third”, says Joshi. And it’s not just the Federal Reserve that’ll step away from easy monetary policy. He expects the European Central Bank to follow suit later this year.
The global theme would be some pullback from the easy monetary policy and a move towards more fiscal-oriented reforms.Dixit Joshi, MD and Head-Fixed Income, Deutsche Bank
The Indian central bank may be on the other side of the spectrum though, says Joshi. And that would be a welcome move given India’s macroeconomic fundamentals.
India has entered this period with rates that were substantially higher than elsewhere, with inflation largely in check. There is no doubt there’s room for rate cuts in India.Dixit Joshi, MD and Head-Fixed Income, Deutsche Bank
The jury’s still out on the full impact of India’s demonetisation, but Joshi says that the pain is likely to last only in the short to medium term and it’s unlikely to be a headwind for the Indian market in the next two years.
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