Famous economist Mohamed El-Erian, who is known for openly criticizing the Fed’s monetary policies, said in the program he participated in yesterday on CNBC that he considered a 25 basis point increase in interest rates to be certain, but the right move is now a 50 basis point increase.
“I would be shocked if they did something different”
Stating that the Fed is now in a low gear mode of progress, El-Erian said that inflation may insist on staying up and therefore a 50 basis point increase is more correct:
“There are many reasons why I find the 50 basis point increase more accurate. Inflation may remain sharply higher. Or, a higher rate hike could be positive in terms of risk management and monetary policy. But whichever way you look at it, it’s a useless discussion because they’re going to raise it 25 basis points. I would be shocked if they do anything other than that. We have come this far with a great tragedy. This cycle will be known as the cycle where the Fed misses opportunities. Two opportunities have been missed so far. The first was in 2021 when they described inflation as ‘temporary’, and the second was when they started the hikes very timidly. Instead of waiting for later, I would make big interest rate hikes now and act accordingly. So you don’t have to raise interest rates again later.”
As it will be remembered, the Fed started interest rate hikes at the beginning of 2022 with 25 basis points in March, increased by 50 basis points in May, and a 75 basis point increase decision was made in the following 4 meetings. The 75 basis point increase frenzy ended in December.
The interest rate decision that the Fed will announce tomorrow night at 22 CET will also be broadcast live on the Uzmancoin Youtube channel. The institution’s announcement of a 25 basis point rate hike here is considered certain.
