Kiharu Member of Parliament, Ndindi Nyoro, has weighed in on the potential US Federal Reserve rate cut, explaining its far-reaching implications for Kenya, emerging markets, and global financial stability.
As the US Federal Reserve meets to determine the direction of interest rates, Nyoro explained why a 2025 rate cut, especially under political pressure, could reshape global markets.
According to Nyoro, the current US inflation trend does not support a rate cut.
“When inflation is going up, the rates should always go in the reverse direction,” he said, citing a jump in US inflation from 2.7% in July to 2.9% in August, the fastest rise since January.
Nyoro suggests that political pressure from US President Donald Trump could influence the Fed’s decision.
“The pressure…to drastically lower the Fed rate is unprecedented,” Nyoro noted, warning that if the Fed bows to political demands, it would signal a loss of its independence, a key pillar of U.S. monetary credibility.
“If they don’t do the bidding, there will be a new Fed Chair by the next review sitting,” he stated
Trump Attacks the Fed
President Donald Trump once again criticized the US Federal Reserve, just hours after the central bank decided to keep interest rates steady early this year, despite his repeated demands for a reduction.
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Trump had accused Fed Chair Jerome Powell and the central bank of mismanaging the economy, claiming they were responsible for creating inflation and had “failed to fix the mess they made.”
At its previous meeting, the Federal Reserve opted to maintain its benchmark interest rate within the 4.25% to 4.5% range, choosing to hold off on further cuts after several reductions last year.
Chairman Powell had noted that the Fed is exercising caution and is not rushing to lower rates again, citing continued uncertainty about the economic outlook.
Possible Global and Kenyan Impact
Should the Fed cut rates sharply, Nyoro anticipates big market reactions:
- Weaker U.S. Dollar: “The dollar will likely lose ground,” Nyoro predicted, noting that this would strengthen most other currencies, including the Kenyan shilling.
- Global Monetary Easing: A Fed cut would likely trigger rate cuts across other economies, including in Africa, encouraging capital inflows into emerging markets.
- Stock Market Boom: Nyoro forecasts a surge in US equities. “The NYSE, NASDAQ will head north… Dow Jones, S&P, and other indices will reach all-time highs,” he said. He added that global stock markets would follow suit, driven by redirected capital.
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- Elon Musk’s Wealth Surge: He even projected that Elon Musk could become the world’s first individual with a net worth exceeding $500 billion by the end of September 2025.
Temporary Gains, Future Risks
Despite the potential short-term gains, Nyoro warned that the “bonanza” would be short-lived.
He expects inflation to bite again by mid-2026, prompting a reversal in monetary policy.
This could result in reduced remittances to developing countries, including Kenya, as disposable incomes shrink in developed economies.
“All this is based on an assumption of a stable global geopolitical environment, especially one that will not harm fuel supply chains,” Nyoro concluded.
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