Allianz chief economic adviser Mohamed El-Erian said on Sunday (9th) that the core inflation rate in the United States is expected to continue to climb, and the US Federal Reserve (Fed) policy has made a major mistake, It could lead to a “destructive recession”.
“I am concerned that the risk of a devastating recession in the United States is very high, which could have been avoided in the first place,” Ilairan said in an interview.
He thinks the Fed has made two major mistakes, one is wrongly identifying inflation as a temporary condition, and the other is that the Fed finally admitted that inflation was persistent and high, but did not take meaningful action. Il Allan likened the Fed’s failure to loosen the gas pedal last year, resulting in having to slam on the brakes this year, which would tip the U.S. into a recession.
Ilairan pointed out that the Fed now must not only overcome inflation, but also must work to restore its credibility. “We have to take more pain before moving towards a world where central banks can change inflation targets. While there are valid reasons for changing inflation targets, it also takes a heavy toll on the credibility of central banks.”
Illairan predicts that the overall U.S. inflation rate is expected to fall to about 8% in September, but the core inflation rate will still rise, so there is still an inflation problem.
Stephen Isaacs, chairman of investment advisory firm Alvine Capital, previously said that investors should think about whether to fight the Fed. People’s investment decisions do not necessarily align with the Fed’s actions, because the Fed can make mistakes, and basically it has been wrong. 2 years.
Isaacs also said that the U.S. economy is not out of the woods yet, and more difficult conditions will emerge in the coming months.