During his forecast put forward hours before Black Monday, which was recorded by the main stock markets worldwide and in the run-up to the Fed meeting that will begin this Tuesday, the also president of Queens College in Cambridge blamed the Federal Reserve for “having fallen behind” .
“The Federal Reserve mischaracterized inflation and fell behind. As a result, the bank lost credibility, and with it its power to easily control the problem,” he continued.
In addition, he warned that “until you regain credibility, you cannot exceed inflation expectations”, and coincided with the estimates of a new interest rate increase of another 50 basis points.
“If the Fed had acted sooner, it could have avoided the position it is in now. Hindsight says we should have moved sooner,” he lashed out.
El-Erian further outlined “best and worst” scenarios for the immediate future of the economy. “The worst case scenario would be that inflation continues to rise and the economy falls into recession,” he stressed.
Instead, the “green” picture could be achieved through a “soft landing” of inflation, in which its headline rate, he described, “falls without economic growth suffering much as a result.”
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
