Opening Bell: Interest rate warning, oil prices creep up and Theresa May warns of "difficult times"

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Top Indian Central Bank official warns of interest rate crisis

In 2005, a top Indian economist warned that there was a global financial crisis looming as a result of excessive risk. Just a few short years later, the words of Raghuram G. Rajan rang all too true, and as he steps away from the top position of the Central Bank in India, he issued another stark warning. 

Speaking to the New York Times on Sunday, Rajan said that lowering interest rates, which is a tactic used to promote economic growth, should not be used as a substitute for real policy. 

Rajan added that countries may become "trapped" by a fear that, if they do eventually move to raise interest rates having had them at low levels for so long, that they "would see growth slow down."


U.S. jobs report weaker than expected.

The U.S. jobs report, issued on Friday, showed lower-than-expected growth rate with 151,000 non-farm payroll (jobs in the goods, construction and manufacturing industries) jobs in August, below the 180,000 that had been forecast by economists, according to Reuters.

That has lead investors to cool their expectations that there may be an interest rate hike from the U.S. Federal Reserve in the coming weeks, which had been estimated to take place as early as this month.

On Monday, the news saw the Nikkei rise by 1.1% to a three-month high, while the dollar also slipped against the yen. The euro also rose as a result, although by just 0.1%, as the markets prepare for an interest rate decision from the European Central Bank on Thursday. 


The British Prime Minister has warned of "difficult times ahead" with Brexit bringing economic and financial difficulties.

Speaking to the BBC at the G20 summit, she said:

"I think we must be prepared for the fact that there may be some difficult times ahead. But what I am is optimistic."

May is hoping to use the summit to build economic relationships with a number of countries in the wake of the referendum result. 

May also stated that there would be no general election in the immediate future, as Britain needed to show stability in the wake of the referendum, and that her government would look at further controls on immigration to the UK from the rest of Europe.

Warning that there was no "silver bullet" for the issue, May said those who voted for Brexit "didn't want free movement to continue as it has done in the past. We will be going out there to deliver on that."


Oil prices rise after Putin calls to limit output.

Oil futures rose again on Monday, following on from Friday's gains as a result of a call from Russian President Vladimir Putin to cap production. 

Members of the Organization of the Petroleum Exporting Countries (OPEC) will meet in Algeria in late September at an informal gathering, where the possibility of instigating a cap would be discussed. A similar move fell apart in April after Saudi Arabia pulled out. 

Speaking on Friday in an interview with Bloomberg, Putin stated that it would be "unfair" to expect Iran to cap their production without the rest of the market also following suit, adding:

"I would very much like to hope that every participant of this market that’s interested in maintaining stable and fair global energy prices will, in the end, make the necessary decision."