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.”
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