Mohamed El-Erian, chief economic adviser at Allianz, warned that monetary policy should not be the only game in town and that fiscal policy must share the burden of addressing the US economy's problems. Speaking Friday on Yahoo Finance's live morning show The 8:30, El-Erian said the deficit is chief among the problems ill-suited for the Fed to handle, calling a 6% of GDP deficit "ridiculous" given unemployment at 4.2%. He cautioned that relying too heavily on rate hikes would sacrifice the housing and car loan markets and worsen the economy's K-shaped divide between the haves and have nots. His remarks came as market expectations shifted sharply, with an almost 80% probability as of Friday afternoon that the Fed holds rates steady, down from a week earlier when an October hike was seen as likely. El-Erian said no rate decision can fix the debt, the spending, or the Iran conflict, yet markets continue to hang on the Fed's every move.
Allianz SE VNA O.N.El-Erian, chief economic adviser at Allianz, comments on Fed rate-cut odds and fiscal policy; no company-specific financial impact
Allianz SEEl-Erian, chief economic adviser at Allianz, comments on Fed rate-cut odds and fiscal policy; no company-specific financial impact
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