Inflation may start to drop but that may not result in a fall in interest rates unless we have a deep recession, said Stephen Dover, Chief Market Strategist and Head of Franklin Templeton Institute in an interview with the Economic Times (ET).
"Inflation will probably start to drop. That doesn't mean interest rates may start to drop. My view is interest rates will go up and be flat and not go back down unless we have a deep recession," Dover told ET.
He further said that the market may possibly go lower but a big fall is unlikely.
"I think that the equity market might be in the short term a little bit ahead of itself. The equity market has just been a very bad predictor of inflation over the course of this last year. But in terms of whether the market is at the low for even this year, I think it could quite possibly go near the low. I am not predicting any big fall," Dover said.
Dover believes the US Fed may not go back to the low-interest rate regime that we have seen over the last few years.
Talking about India aiming to be a manufacturing hub, Dover said even if India can improve its manufacturing, it can't replace China.
"Even if India can improve its manufacturing, I don't think India can replace China. India could very well have higher growth than developed markets or China. I think it's probably likely to be more sustainable for a longer period. But it is not going to be double-digit growth like we had in China for a period of time," said Dover.
Disclaimer: This article is based on an ET interview. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.
