Speaking with CNBC-TV18 at the World Economic Forum in Davos, Gopinath noted the resilience of the US economy and labour market, which has exceeded expectations from just a few months ago.
“I can see that the Fed will be cautious about any further rate cuts. They’re going to track the data and follow the impact of all the new policies that are being announced,” she said.
Gopinath explained that the strong US economy, coupled with high inflation expectations, has shifted market expectations from multiple rate cuts to possibly just one this year. “There are, compared to the middle of last year, fewer expectations of rate cuts this year,” she said.
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India, she noted, continues to shine as the fastest-growing major economy, with the IMF projecting 6.5% growth for the current fiscal year.
Gopinath is positive about India’s economic prospects, particularly in the second half of the fiscal year.
The key area where India must focus to enhance its position in global trade is infrastructure. Improved infrastructure – such as ports, roads, and transportation networks – is essential for seamless integration into global supply chains. Regulatory and tax certainty will play a vital role in boosting investor confidence.
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India is currently on the higher end of global tariffs. Reducing these is essential to becoming a major exporter, as many exporters also rely on imported inputs, she explained.
For the full interview, watch the accompanying video
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