US in stagflationary shock, India remains outlier: BofA

As the US economy goes through a stagflationary shock owing to higher tariffs, India and other countries will remain outliers, according to Claudio Irigoyen, managing director and head of global economics research at Bank of America Global Research.

- Gopika Gopakumar

While Irigoyen expects the US Federal Reserve to refrain from cutting rates as it tackles lower growth and higher inflation, he says other central banks are likely to cut rates as they face lower growth and lower inflation. The market was earlier expecting five rate cuts from the US Fed this year, but has lowered its expectation to two.

"We call it a slowdown but not a recession (for US). So those are the two biggest out-of-consensus calls we've had," said Irigoyen. "The Fed will not cut and the US economy will slow down but will not enter into a recession."

Irigoyen's team has lowered the global growth estimate to 2.8% for 2025 from 3.1% earlier. BofA expect India's gross domestic product (GDP) to grow 6.3% and Europe's 0.9%.