Mohamed El-Erian, chief economic adviser at Allianz, has told CNBC that investors should prepare for a U.S. rate hike this summer, but added that the Federal Reserve will cushion the blow with “very aggressive forward guidance policy”.
When the Fed eventually does start lifting rates from their current record lows, they will stop “well below” historical averages of 4 percent, the former co-CEO Pimco told CNBC at the Global Financial Markets Forum in Abu Dhabi.
“My own impression is that we will get a rate hike this summer, by September, not in September,” he said.
This will be accompanied by “very aggressive forward policy guidance, which tells us it’s a long journey, so markets don’t go to the terminal late. We want to focus on a very gradual journey,” he said.
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