Fed Can’t Reach 2% Inflation Without Crushing Economy, El-Erian Says

Stable inflation rate should be 3-4%, El-Erian told Bloomberg
The Fed is unlikely to change its goal post, he said

Mohamed El-Erian, chief economic adviser at Allianz and Bloomberg Opinion columnist, says he hopes the Federal Reserve can tolerate US inflation above its 2% target. “I don’t think they can get CPI to 2% without crushing the economy, but that’s because 2% is not the right target,” he says on “Bloomberg The Open.”Source: Bloomberg

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By Victoria Cavaliere

February 17, 2023 at 5:42 PM UTC

This article is for subscribers only.

The Federal Reserve won’t be able to get US inflation down to its 2% target without “crushing the economy,” economist Mohamed El-Erian warned on Friday, but he said the central bank is unlikely to officially change that goal post.

“You need a higher stable inflation rate. Call it 3 to 4%,” El-Erian, the chairman of Gramercy Funds and a Bloomberg Opinion columnist, told Bloomberg Television. “I don’t think they can get CPI to 2% without crushing the economy, but that’s because 2% is not the right target.”