Sonal Desai: the Federal reserve is too relaxed

The US central bank is being far too relaxed about the potential consequences of taking out an “insurance” interest-rate cut reckons Sonal Desai of Franklin Templeton.

Sonal Desai, chief investment officer, Franklin Templeton Fixed Income Group

(Image credit: 2011 Franklin Templeton Investments Photographer: Kevin NgUnlimited Usage Rights)

Markets have been cheered by the idea that Federal Reserve chief Jerome Powell now looks likely to cut interest rates later this month. Yet the US central bank is being far too relaxed about the potential consequences of taking out an "insurance" cut (so-called because the idea is to cut rates "just in case", rather than in response to a downturn in the economy), reckons Sonal Desai, chief investment officer at Franklin Templeton's fixed-income unit, which has $152bn in assets under management.

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