Fed had to choose Between Inflation or Recession: Chief Economist 

One might cause a recession, while the other could keep inflation high until 2023. 

According to Mohamed El-Erian, Chief Economic Advisor of Allianz, the Federal Reserve will have to “choose between two policy blunders.”

Inflation, Recession, and the US Economy

In an interview with Bloomberg on Friday, economist Mohamed El-Erian reviewed the state of the US economy and the Federal Reserve’s efforts to manage inflation.

“I believe the moment for a gentle landing is passed,” the economist stated.

El-Erian is the Chief Economic Advisor of Allianz, the parent company of PIMCO, one of the world’s largest asset managers, where he previously served as CEO and co-chief investment officer. He is also the president of Cambridge University’s Queens College.

Last week, Blackrock, the world’s largest wealth manager with roughly $10 trillion in assets under management, stated something similar:

They [the Fed] risk causing a recession if they raise interest rates too quickly. If they do not tighten sufficiently, the risk of runaway inflation rises.

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He was asked what he thinks Federal Reserve Chairman Jerome Powell can do in the present economic climate.

 “At best,” the economist said, “it’s what Chair Powell called a’softish’ landing, and the ‘ish’ is crucial.” “We could have done it,” he said, “but that would have required the Fed to move nine months ago.” It ought to have. It didn’t work out. 

As a result, rather than tightening into an expanding and dynamic economy, it is tightening into one that is slowing.”

The Allianz analyst isn’t the only one who believes the US economy is destined for a fall. Elon Musk, the CEO of Tesla, stated last week that we are either in or near a recession. He, on the other hand, sees it as a positive.

Steve Anderrson

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.