Sterling has become a key attacker for Gareth Southgate's Three Lions, shining at Euro 2020 and in World Cup Qualifying matches.
However, he has failed to show his best qualities in front of goal with City over the past 12 months.
Reports had even suggested City were willing to sell Sterling to fund a move for a big money attacker, but no such transfers materialised.
"It's only because he's been taken out of the team that he's lost confidence,' Ferdinand said on his Vibe with Five show.
"He was on fire. He was producing.
"This guy was the go-to guy when they needed a goal for so many years. All of a sudden, he's in the wilderness. I'm just baffled by it; I don't understand it.
"But this is the thing with Pep [Guardiola], he gets it right more often than not, but with this one with Sterling... there must be clubs sitting there going, "boy, let me see how this situation pans out because I will take Sterling all day."
"If I'm Liverpool, I'm buying Sterling tomorrow."
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