nklin Templeton’s Sonal Desai sees Fed cutting rates by 75 bps in 2025 amid fiscal challenges – CNBC TV18
Desai explained that her forecast for Fed rate cuts has consistently been lower than what markets predicted earlier this year and late last year. She expressed concerns about the Fed’s approach, stating that it has limited room to adjust rates, suggesting the Fed may already have used more rate cuts than advisable.
The Fed has implemented 50 bps and later 25 bps rate reductions. While Desai did not view these moves as disastrous, she described them as “not particularly prudent,” given the limited scope for further cuts.
According to Desai, the Fed’s neutral rate — the rate at which monetary policy neither stimulates nor restricts the economy — is around 4%. This leaves the Fed only about 75 bps of room for additional cuts, which she believes should be carefully considered. She emphasised that skipping further cuts might be the smarter option.
Also Read: This global strategist predicts Fed rate cut in December, dollar peak by mid-2025
Shifting her focus to India, Desai projected the country’s economic growth to average around 6.5% in the near term. She stated that the Reserve Bank of India (RBI) is unlikely to base its monetary policy decisions solely on a single data point, such as the GDP figures for July to September 2024 (Q2FY25). Instead, the RBI may consider a broader range of economic indicators.
For more details, watch the accompanying video
(Edited by : Unnikrishnan)
