Wish RBI was US central bank, says Jim Rogers

NEW DELHI: Wish your central bank was our central bank, exclaims commodity market ace Jim Rogers.

Reacting to the crash in the Chinese equity market that resulted in the halting of trade in the country’s stock markets for the second time this week, Rogers said, “Calendar 2016 will be the year when the markets will have to pay the price for bad policies".

The Shanghai Composite tanked 7.32 per cent on Thursday while the CSI 300 index plunged 8.2 per cent, triggering lower circuit and leading to a suspension of trade for the rest of the day.

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In an interview with ET Now, the ace investor said the meltdown in the global equity markets was the result of decades of easy money policy that the US central bank followed since the global financial crisis of 2008-09.

“The US Federal Reserve has added excess liquidity in the market,” he said. “Debt buildup in the US markets on the back of easy credit is one of the major reasons for the global crackdown.”

The US Federal Reserve has kept key lending rates close to zero for the better part of the previous decade. Recently, it began the process of moving away from that path, hiking key rates by 25 basis points on the back of strength in the US economy.

Rogers’ compliment is one of the many that the Reserve Bank of India, spearheaded by Raghuram Rajan, has received in recent times for its solid performance in keeping inflation and the domestic currency in check.

He said fundamentals would eventually catch up with global equity markets and maintained his stance of going long on the Chinese markets and short on US junk bonds. “Greed is in the American markets as of now,” he said, adding that some parts of the Chinese economy will do well, no matter what.