Faced with this situation, the market began to prepare for another error by the FED, considered the prestigious economist Mohamed El-Erian.
After knowing the new inflation percentage, the president of the Fed of San Luis, James Bullard, came out to support an increase of 100 points in the rates for March although he admitted that he would leave that decision in the hands of the president of the organism, Jerome Powell.
For El-Erian to decide on Bullard’s proposal, the body would recognize that it made a policy error, which would add two.
“The first was on November 30, when they finally pulled ‘transitory,’ after calling inflation bad for so long,” he told CNBC.
“And now this policy mistake would be to start hitting the brakes because they didn’t take their foot off the gas soon enough.”completed the specialist.
In his view, if the Fed makes quick decisions in the next few days about raising rates, “it will end up in a ‘lose-lose’ situation for the stock markets and the country’s economy.”
“So the market is pricing in a higher probability of a Fed policy error,” he remarked.
Source: Ambito
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