European stocks mixed on Friday after volatile week; U.K. economic woes
Investing.com -- Prominent economist Mohamed El-Erian cautioned markets against getting "carried away" by New York Fed President John Williams’ dovish comments on Friday, highlighting potential challenges ahead for the Federal Reserve’s December policy decision.
In a post on social media platform X, El-Erian noted that while Williams’ remarks likely align with Fed Chair Jerome Powell’s views, Powell "still faces an uphill battle convincing the FOMC to avoid a divisive December 11 decision."
Williams, a voting member of the Federal Open Market Committee, stated that the central bank can still cut rates "in the near term" without endangering its inflation goal. Following these comments, market expectations for a December rate cut increased significantly, with traders now seeing more than a 70% chance of a 25 basis point reduction, up from approximately 37% earlier in the day, according to CME FedWatch Tool data.
However, El-Erian pointed out that upcoming economic data may not help resolve policy differences among Fed officials, especially after the Bureau of Labor Statistics announced it will not release October CPI inflation numbers.
The economist further explained that Fed officials might struggle to quickly develop a cohesive forward-looking strategy after having been "excessively data-dependent for so long."
This division among policymakers was evident Friday when Boston Fed President Susan Collins expressed a contrasting view on CNBC, stating that monetary policy was "in the right place," suggesting skepticism about the need for another rate cut.
Wall Street’s main indexes edged higher on Friday as technology shares stabilized following a significant selloff in the previous session.