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00:00Has the Fed just committed to driving us into a recession. That is an unfair question because the Fed has no choice but to confront inflation. So in doing so and because it's late. Yes it has increased the probability of a recession. But the original sin John was committed last year. And once you start from such a suboptimal position you end up in this dilemma which the Fed has right now which is is going to end up making one of two policy mistakes. Either push the economy into recession with a high likelihood while tentatively persist with high inflation for too long. You believe they would take the latter option. Is that still your stance. I believe they're going to flip flop and that's the worst of all three possibilities that they. Right now the focus on inflation as the growth consequences become clear that they're going to ease the foot of the brakes and then have to slam on the brakes again. And that is my fear that they will end up flip flopping something that we used to witness in the old days with central banks. And I worry that we may see it again. I hope we don't. But I do worry that we may see it again. Is that weakness clear now. And do you think that your mandate is in conflict right now already. So it depends how you define the mandate. The mandate is strictly defined as employment. No the labor market is still doing well. If you take a broader look at growth indicators are that growth is slowing down yet that the Fed is at zero for the second quarter an average of projections see it coming down below 1 percent. So growth is is slowing down. But the good news is that the labor market is still strong. So Mohammed when Chairman Powers says this line from this morning the Fed is acutely focused on returning inflation to 2 percent. How much damage do you think he will have to inflict on the economy to achieve that. Unforeseen is going to have to inflict some damage on his lead. He's very late. He should have started last year easing his foot off the stimulus accelerator. He didn't. I always go back to the very simple factoid the week in March that the US printed a seven handle on CPI. The Fed was still injecting liquidity into this economy. Just think about that John. So he's very late. And therefore the collateral damage is gonna be significant.

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El-Erian Fears the Fed Will End Up 'Flip-Flopping'

Mohamed El-Erian, a Blooomberg Opinion contributor, says Federal Reserve Chair Jerome Powell is "very late" on policy tightening and the collateral economic damage will be significant. He speaks with Jonathan Ferro on "Bloomberg The Open." El-Erian's opinions are his own. (Source: Bloomberg)

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