Uday Kotak, Executive Vice Chairman and Managing Director of Kotak Mahindra Bank, on Friday expressed hopes that the ‘wolf of inflation’ does not come out in the year 2022 or 2023. Speaking in context of inflation, which investors expect will rise higher as economic recovery gathers steam, he said the ‘cry wolf’ story has been heard multiple times post 2020.
Kotak was on Friday awarded the India Business Leader of the Year award at CNBC-TV18’s virtually held 16th India Business Leader Awards (IBLA) 2021, which honoured high-achievers, outstanding leaders and true visionaries of corporate India and especially focused on those who made a difference in the year of the COVID-19 pandemic.
“If you look at the history post 2000s, we have heard the ‘cry wolf’ story very often. I still remember in 2008-09 huge amounts of money and liquidity were pumped in a post global financial crisis. I recollect economist telling us that the end result of so much liquidity and printing of money has to result in back-ended inflation. But I am still waiting in 2021 to figure out where that inflation is,” CNBC-TV18 quoted Kotak as saying.
“The challenge with the cry wolf story is that you say cry wolf long enough and the wolf has not come, but at some point the wolf does come and I hope that the wolf does not come into 2022 or 2023 that is the point which I would watch very closely — that is the wolf of inflation or significantly higher bond yields — is that wolf around the corner in 2022 or 2023. Therefore I will keep one eye on that from a risk management point of view,” he said.
The Kotak Mahindra Bank CMD added, “It (inflation) depends on how much of printing of money keeps on happening. If I see the price of bitcoin going to where it is – it is telling us investors are saying I have less confidence in the US currency and more confidence in bitcoin that is worrying to me. Because when you start saying the currency is not giving me as much confidence as some technology thing, it does worry me where are we going.”
“You can’t keep on endlessly printing paper and call it a valid currency and assume nothing happens forever. Therefore there is a deep concern and the size of stimulus and printing of money which is happening this time post pandemic is multiple times what happened post the financial crisis. Therefore, it is much larger and I would watch out for 2022 and 2023 this time more carefully because there is a chance that the wolf finally may appear when everybody has said forget the cry wolf story,” Kotak explained.