Investors should not take too much heart from signs of slowing inflation, as the Federal Reserve is unlikely to slow its rate hikes as the economy is still strong enough to withstand further monetary tightening, top economist Mohamed El Erian says .
Speaking to CNBC, the Allianz chief financial officer and president of Queens College, Cambridge, said the Fed should “lock in gains” rather than pull back after July’s better-than-expected consumer price index reading.
“They cannot celebrate,” the veteran economist pointed out.
It is noted that for her part, Mary Daly of the San Francisco Fed had also argued that “it is too early to declare victory against inflation”.
As Mohamed El-Erian told CNBC, “I think the Fed will welcome the latest inflation data, but it’s not going to slow down in any significant way.”
“The Fed is not going to slow down in any significant manner,” he says @elerianm. “The Fed has had a couple of really good data reports which suggests to them that they can continue doing what they’re doing because the underlying strength of the economy is still significant.” pic.twitter.com/QhjZCZ7In3
— Squawk Box (@SquawkCNBC) August 11, 2022
He expects the bank’s next rate hike to be “somewhere between 50 and 75 basis points”, which he said is still significant given that the last two hikes were 75 basis points.
It is recalled that as it became known on Wednesday, consumer prices slowed to +8.5% from the 40-year high of 9.1% that had preceded it.
Source: Capital
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