Central Banks

Fed Has Message Problem After Early Rate Pause Signals, El-Erian Says

Central bank now in ‘smaller corner’ after rate speak pre-data
Given stronger jobs result, Fed should hike in June, he says

Mohamed El-Erian, chief economic adviser at Allianz and Bloomberg Opinion columnist, says a “true to their target” Federal Reserve would its benchmark interest rate at the next policy meeting in June. “If they are true to their word, they should hike because they are data dependent and the data has been hotter than expected” he says on “Bloomberg The Open.” El-Erian’s opinions are his own.Source: Bloomberg

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By Vildana Hajric and Jonathan Ferro

June 2, 2023 at 2:08 PM UTC

This article is for subscribers only.

The Federal Reserve shouldn’t have led investors to expect a pause in interest-rate hikes in June before officials saw last month’s jobs numbers, says Mohamed El-Erian.

“People are now going to be scratching their head — why did they guide the market so strongly towards a skip ahead of this report and ahead of the next CPI,” the chief economic adviser at Allianz SE and a Bloomberg Opinion columnist told Bloomberg TV on Friday, following a stronger-than-expected May jobs release.