El-Erian Says Fed Risks Losing Control of Messaging on US Rates

The US Federal Reserve is losing control of its messaging on interest rates, but financial markets are wrong to expect imminent cuts, Allianz Chief Economic Adviser Mohamed El-Erian said.

El-Erian, a Bloomberg Opinion columnist, said the Fed may well tolerate higher inflation instead of pushing the economy into recession to hit its 2% target. But he also said investors are over-reacting by pricing in sharp rate cuts.