El-Erian Says Fed Can't React to Every Piece of Data

Mohamed El-Erian, chief economic adviser at Allianz and Bloomberg Opinion columnist, says that the Federal Reserve should stay focused on price stability and not overreact to the recent turmoil in banking. "The worst thing that we could do right now is to say 'we have a credit issue coming up -- let's cut interest rates,'" El-Erian said in an interview with Bloomberg in Cernobbio, Italy. "If they do that we will end up with stagflation and financial instability." El-Erian's opinions are his own.

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[MH_Bikes]

It is 100% Powell's fault, he was sleeping far too long and is now overreacting. He needs to resign and the Fed must pause. Or the Fed pause and then he resigns.

We lived with stagflation through the 70's and its better than financial institutions failing.

[hayderley]

El-Erian and Lawrence H. Summers are the best Interviewees in the economics arena.

[rick_h]

Inflation is worse than unemployment. It increases the rich versus the poor gap. It rips off those who are trying to save for the future. Unemployment is temporary and is easier to fix than inflation. I don't want to live in a Venezuela, Argentina or Zimbabwe. The primary goal of the Fed should be to fix inflation. Unemployment is secondary. With unemployment there is insurance supplied by Uncle Sam.

[mand]

Understanding is one thing, however action is another. A mistake? No, plenty of mistakes and more to follow as Powell brings us into depression.

[treaty]

Ill make sure not to call square one due to their annoying commercial

[CaneBTC]

Rasing rates 2000% in 1 year was never an option. Yet the stupid Fed tried it. That´s such a catastrophic mistake it should be dismantled permanently for incompetency. At this point bitcoin is the only sane flight to safety. i have zero fiat or equity atm.

[killapnguin]

Its not the governments job to monitor private companies. if they fail they fail. The free market will resolve issues as they arise. NOt printing more money to buy assets for a major loss.

[seanburke]

If the Fed were driving a car, they would alternate between jamming the accelerator to the firewall, and then standing on the brake pedal, and looking in the rear-view mirror the whole time.

[jmlfa]

But El-Erian can.... "warning signs are now flashing yellow ..."

[titusp]

This is the same guy who argued rates should have been faster and higher (100 bps etc neutral rate higher than inflation meaing higher than 5% ... now he is saying he knew the fragility of Financial markets (banking system & pensions)? did El-Erian give any indication of risk or did he always ... ALWAYS argued on the side of inflation control? (he did waffle a bit last Quarter when inflation came down fast).