Mohamed El-Erian: Federal Reserve Is Torn

The Federal Reserve is torn about whether it is leading the stock market or does it react to it, but it is clear the central bank is worried the market has been underestimating the probability of a rate hike, Allianz’s chief economic advisor, Mohamed El-Erian, said Wednesday.

The Fed released the minutes from its April meeting Wednesday, which show it will likely raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment.

“Moves in financial conditions as a whole are making them more confident about going forward and they were worried that the markets were underestimating the possibility of a rate hike this year and they wanted to do something about it,” El-Erian said in an interview with CNBC’s “Closing Bell.”

CNBC

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.