El-Erian Says Fed Lack Vision on the Path of the US Economy

Federal Reserve policymakers “don’t have a vision” for where the U.S. economy is going, Allianz Chief Economic Adviser Mohamed El-Erian said Thursday, a day after central bankers decided not to increase interest rates.

“The collateral damage and unintended consequences of this prolonged experiment with very low interest rates [and] very big balance sheets are starting to have a meaningful [negative] effect on the economy,” El-Erian told CNBC’s “Squawk Box.”

Without a clear idea for the future of growth, the Fed has become “overly data-dependent,” El-Erian said, arguing that such an approach has been sending “conflicting signals over time.”

The former co-CEO of Pimco said investors are left wondering whether the Fed is “being totally inconsistent or the Fed [is] being a slave of the markets.”

The Fed raised rates in December for the first time in more than nine years. At the time, central bankers projected four more rate hikes in 2016. But the new year market turmoil scaled back those expectations.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza