HSBC, the world's local bank, would choose to operate as a full- service lender in select geographies such as the UK, and a corporate financier in most others, Noel Quinn, Group Chief Executive, tells MC Govardhana Rangan, Bodhisatva Ganguli and Joel Rebello. While a group of investors sought the bank's restructuring to boost returns, Quinn believes recent rising incomes prove the lender's current structure is adequate to help achieve the desired results. Edited excerpts:
How would you read Fed chairman (Jerome) Powell's speech at Jackson Hole indicating big rate increases due to high inflation?
Clearly, there's a major economic challenge for the world with the level of inflation where it is. And nobody's quite sure as to whether inflation will start to cap out in the near term or will continue to rise. The question mark is on how much higher interest rates need to get to in order to manage the inflationary pressures. There will be a correction in the demand curve, because as inflation is starting to impact disposable income, I believe the demand side of the equation is going to start to soften. And maybe that will do some of the job of interest rates.
Some say that the withdrawal of QE (Quantitative Easing) poses a greater challenge for the markets.
I think QE needs to be withdrawn progressively. QE was brought in for a reason... first of all, for the global financial crisis, then brought in because of the COVID situation. And I think markets did need to see a level of normalisation emerge. And, therefore, it is right to progressively withdraw QE to return the markets to a more normal operating environment.
This is a time when rates would go higher and economies would contract. How is this going to play out in the financial markets?
It's not equal all around the world. There are different market dynamics taking place in continental Europe, particularly at the moment with the impact of the Russia-Ukraine war, the energy supply challenges for Europe and the inflationary consequences of that. Contrast that to the Middle East which is a very different set of economic circumstances. If I contrast it here in India, the inflationary pressures in India are not as great as the inflationary pressures in India are not as great as the inflationary pressures elsewhere in the world. So I think what you're going to find is governments will adopt different interest rate policies to suit their particular part of the economy. You're going to see more divergent economic policies emerge over the coming years.
Read more at: https://economictimes.indiatimes.com/news/economy/indicators/inflationary-pressures-in-india-are-not-as-great-as-elsewhere-in-the-world-says-hsbcs-noel-quinn/articleshow/94013715.cms
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