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.”


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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.