- Oct 25, 2021
- Reaction score
Allianz Chief Economic Advisor Says Calling Inflation ‘Transitory’ Was a Bad Call by the US Central Bank
At the end of April 2021, members of the Federal Open Market Committee (FOMC),
Just before the Bureau of Labor Statistics’ November consumer price index (CPI) report was published, the ‘transitory’ talking heads started to back peddle on saying that inflation was temporary. The latest CPI report
For instance, the name “Federal Reserve” is
“The characterization of inflation as transitory is probably the worst inflation call in the history of the Federal Reserve, and it results in a high probability of a policy mistake,” El-Erian insisted during his interview. “So, the Fed must quickly, starting this week, regain control of the inflation narrative and regain its own credibility,” the Allianz chief economic advisor said. El-Erian further added:
Otherwise, it will become a driver of higher inflation expectations that feed onto themselves.
Critics Denounce the Fed’s Actions Using Terms Like ‘Fraud’ and ‘Bankrupt,’ El-Erian Says the Central Bank Can Still Change Its Course
The popular finance author
As of right now, the Federal Reserve has been talking about rate changes and tapering back quantitive easing measures, but so far has yet to implement any of its discussions. El-Erian opined that the U.S. central bank should, however, “ease their foot off the accelerator,” instead of tapering at an extremely fast rate. The economist further said that rather than the rich being affected by inflation, like a number of media pundits
“There is the possibility that they may have to raise rates,” El-Erian concluded. “Look, it’s important to stop inflation [from] being embedded into the system because two things happen when inflation gets embedded. One, you lose purchasing power, and the poor suffer the most. Second, you get a Fed overreaction and then you get a recession and then you get income losses. So, you really want to navigate this process in a timely and orderly way.”
What do you think about the recent criticisms toward the U.S. Federal Reserve and Mohamed El-Erian’s statements about the Fed’s ‘transitory’ description of inflation? Let us know what you think about this subject in the comments section below.