El-Erian anticipates earlier hikes from ECB

The European Central Bank (ECB) could be prompted to raise interest rates sooner than planned against a backdrop of inflation and divergent monetary policy, according to Allianz’s Chief Economic Advisor, Mohamed El-Erian.

“It wouldn’t surprise me if they (the ECB) start hiking in the middle of summer (2019), as opposed to the end of the summer, or even the beginning of the summer. But they’re going to retain optionality ’til the very last moment,” El-Erian told CNBC’s Nancy Hungerford Tuesday.

El-Erian, a prominent economist and one-time CEO and co-CIO of bond giant PIMCO, said the interest rate policies of central banks were diverging quickly. The Federal Reserve has already embarked on rate hikes amid robust U.S. economic growth while the euro zone’s central bank, the ECB, is approaching rate hikes with caution. It has yet to increase rates with the 19-country euro zone still showing signs of regional weakness, and vulnerable to mounting global trade tensions.

CNBC

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
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 Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. 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.