Surveillance: El-Erian Says Fed Inflation Target Should Be Closer to 3%
‘Excessive data dependence’ leaves open the risk of economic damage, he says
The Fed kicks off a triple-header of central bank meetings next week, followed by the European Central Bank and the Bank of Japan.
Photographer: Nathan Howard/BloombergThe Federal Reserve is headed for a 25 basis-point hike next week, dovish signaling about rates and, by rights, should be done with this cycle of increases.
Mohamed El-Erian outlined that scenario on Surveillance ahead of a huge run of central bank news, with the Fed’s July 26 decision followed by the European Central Bank and the Bank of Japan on successive days, and then the Bank of England on Aug. 3. His one-and-done prediction, though, is based on a different approach than the follow-the-data Fed is taking.