Mohamed A. El-Erian , Columnist

The Fed’s Uniformity on Rates Comes With Risks

The high-for-long mantra recently adopted by US central bank policymakers raises threats for the economy and financial stability.

May 22, 2024 at 9:30 AM UTC

By Mohamed A. El-Erian

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

Watching the data: Federal Reserve Chair Jerome Powell
Photographer: Chip Somodevilla/Getty Images North America

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Whether traditionally thought of as “hawks” or “doves,” Federal Reserve officials have recently converged to notable uniformity in their policy signaling of high interest rates for longer. This has come at a time when more Wall Street analysts are embracing a wider band of uncertainty for their projections of economic growth and inflation. It is a situation that raises three risks to economic prosperity and financial stability.

Shaken by a string of hotter-than-expected readings for all the major inflation measures in the first quarter, Fed officials have become more cautious about their previous expectations for continuously softening price pressures. Chair Jerome Powell summed up this shift last week when he said that his confidence in lower inflation is “not as high” as it was at the start of the year.