Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
Investing.com -- The Federal Reserve is anticipated to hold off on cutting interest rates for a considerable time, following a higher-than-expected inflation report, as per Mohamed El-Erian, president of Queens’ College, Cambridge and a Bloomberg Opinion columnist.
El-Erian stated in a Bloomberg Television interview on Wednesday that the central bank should, in theory, increase rates if it is genuinely dedicated to the 2% inflation target. However, it appears more probable that the central bank will maintain rates, allowing for a higher inflation rate to safeguard economic growth and U.S. exceptionalism.
El-Erian referred to January’s consumer price report as unfavorable for the Federal Reserve. He suggested that the central bank will tolerate high inflation and continue to assure the public that the situation is under control. He also predicted that the pause on interest rate changes will extend longer than market expectations.
This perspective reflects a lack of clear policy direction from the Federal Reserve, with El-Erian noting that the bank seems unwilling to adopt a strategic view. If the Federal Reserve is truly committed to its 2% inflation target, the next move should logically be a rate hike, according to El-Erian.
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