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Mohamed El-Erian

Global financial commentator

Mohamed A. El-Erian is president of Queens’ College, Cambridge, and an adviser to Allianz and Gramercy.

Mohamed El-Erian

Yesterday

San Francisco skyline. Highly leveraged sectors, such as commercial real estate, are suffering.

The Fed should resist market bullying

The risk is that, to avoid unsettling market volatility, the Fed validates the market loosening with sizeable rate cuts but is forced to reverse course later.

This Month

Despite economic bills passed by President Joe Biden’s administration, dwindling household savings and higher debt cast a shadow over US growth outlook for the coming year.

Upbeat predictions for global economy are not cause for optimism

The main concern is that too many policymakers seem more focused on reinvigorating inefficient growth engines than shifting towards more sustainable, forward-looking models.

November

Former US Federal Reserve chairman Alan Greenspan.

Federal Reserve officials talk too much

It’s no wonder forecasters and traders show little hesitation in consistently ignoring the central bank’s guidance, including for policy rates.

October

Fed boss Jerome Powell’s next opportunity to check bond volatility will be on November 1.

The Fed pivot that turbulent Treasuries need

At a minimum, US policymakers need to shift from backward-looking data to combining data dependency with a clearly articulated economic vision.

August

The economy, the markets and the Fed still need to navigate what’s already in the pipeline from the handful of items that, more than two years ago, helped initiate the current inflationary episode.

Good news on US inflation comes with an asterisk

While there is certainly a lot to like in the latest CPI report, there is also need for greater care in simply extrapolating its path.

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Volatility is being driven, and likely will continue to be, amid the prospects of significantly higher debt sales by the US government.

What US Treasury volatility means for the economy

While the shifts in yields on US government debt are likely to diminish, Mohamed El-Erian argues they will not disappear.

A Chinese EV factory: growing the old way is not longer working.

The world economy can’t just muddle through any longer

China’s mishandling of the post-global era finally shows that a fresh model is needed.

A vendor waits for customers in a Beijing store. China’s growth challenges are both cyclical and secular.

There’s nothing comforting about the global economic outlook

Signs of apparent convergence are multiplying in economic and financial domains. We should do our utmost to moderate the pull of the reassuring narrative.

  • Updated

July

A restaurant worker in the City of London. The drivers of inflation are more complex and diverse than just wages.

Just blaming wage growth for inflation is misleading and dangerous

The UK inflation debate now focuses excessively on wage-push inflation, where providers of goods and services pass on higher wage costs to consumers. This is unfortunate.

  • Updated
caption

This is why central banks need more scrutiny

June was a tough month for the masters of monetary policy. And in the face of a stubborn trilemma of challenges, they need help to restore credibility.

June

inflation

Fed poised to give ‘muddled’ rate decision

A ‘skip’ at this week’s policy-setting meeting may be the worst of three imperfect policy options.

May

The Fed is still digging out the hole in made for itself in 2021.

Why the US Fed is losing its way

The world’s leading central bank is hard to predict because it lacks a solid strategic policy framework and was overtaken by events.

The manner in which First Republic failed is also adding to sector jitters.

How we can avoid a third phase of banking turmoil

Conditions have stabilised but more must be done to prevent further banking tremors. The US Federal Reserve has the power and the tools to do the job.

April

The US economy is facing cyclical and structural uncertainties.

Why the US economy is sending out mixed signals

Over the past six months, the consensus narrative among economists and Wall Street analysts has gone from an expected soft landing, to a hard landing, to no landing.

  • Updated
Jerome Powell heads a Federal Reserve that is increasingly under pressure.

The US Fed’s policy failings are now too obvious to be ignored

The current Fed may be remembered not for taming inflation, or even letting it out of the bag. It may have its own ignominious special place in history.

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An SVB customer talks to media outside the bank’s headquarters in California after news of its collapse. Poor risk management and inadequate business diversification were at the root of the bank failures.

Banking tremors leave a legacy of credit contraction

Success in dealing with the immediate threat of bank runs, as welcome as this is, has not eliminated the risk that the US banking tremors pose for the economy as a whole.

March

The Silicon Valley Bank collapse demonstrates that even seemingly small banks can pose systemic risks.

Fed must stay the course on rates despite SVB collapse

The Fed should tolerate greater banking system concentration while seeking to contain moral hazard and avoiding lower rates.

  • Updated

February

Federal Reserve chair Jerome Powell, after championing “transitory inflation” for too long, is now warning against it. ”

There are no shortcuts to bringing down inflation

The comeback of the ‘transitory’ thesis is dangerous. Encouraging central bank complacency could exacerbate an already serious problem and make it harder to solve.

Traders hang on every word of Federal Reserve chairman Jerome Powell after February’s rate rise.

Fed takes a lone-wolf approach to monetary policy

A gap has emerged between the US central bank and its peers at a time when its policy signals have become at odds with financial conditions.

January

In an inherently fluid world in which the probability of yet another policy mistake is uncomfortably high, a 0.5pc rise allows for an easier recovery in the event of such an error.

Why the US Fed should raise rates by 0.5 of a percentage point

Lifting more than markets expect next week may help reverse some of the damage to the Federal Reserve’s inflation-fighting credentials.

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