Mohamed A. El-Erian , Columnist

Why the Fed Should Not Deliver a Big Rate Cut

Caving to pressure could help markets but would risk harming the U.S. economy.

July 19, 2019 at 9:00 AM UTC

Corrected

July 19, 2019 at 1:32 PM UTC

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.”

Under pressure.
Photographer: Andrew Harrer/Bloomberg

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What’s wrong with a 50 basis-point interest-rate cut?

I’m all for central banks doing their utmost to support high, durable and inclusive growth. But this doesn’t mean throwing everything at the wall when the economy is doing relatively well, financial markets are buoyant, and policy ammunition is limited. Growing pressure on the Federal Reserve to cut interest rates by 50 basis points this month is unwarranted. By complying, the Fed would serve the short-term interests of financial asset holders at the risk of greater difficulties down the road.