Top economist El-Erian says the Fed could have avoided 'higher, faster, longer-lasting' rates and elevated recession risk if it had acted sooner
published on Wednesday ahead of the central bank's rate announcement."Yet, because it has been so late in responding, the Fed will be aggressively hiking into a weakening domestic and global economy."
The situation has caused many to lose faith in the central bank, and there is risk that politicians, companies, and households could think of the Fed"as part of the problem and not part of the solution," added El-Erian, who is the chief advisor to Allianz and the president of Queens' College at Cambridge University in the UK. He was previously the CEO of US bond-fund giant Pimco.
"There is an increasing number of economists warning that the Fed will tip the US into recession; and a growing number of foreign policymakers complaining that the world's most powerful and systemically important central bank is pulling the rug out from under an already fragile global economy," he wrote on CNN.
Jerome Powell, the current Fed chair, admitted in a congressional hearing in March that the central bank should have acted earlier. "It's just taking so much longer for the supply side to heal than we thought."The Fed did not respond to Insider's request for comment that was sent outside regular business hours.
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