El-Erian Says Fed’s Higher-for-Longer Rates U-Turn Is at Odds With Market

• Fed’s 2% inflation target is ‘totally arbitrary’: El-Erian
• Real economy, not inflation, will force Fed to pivot, he says

The Federal Reserve’s delay of interest-rate cuts in a bid to temper inflation runs the risk of falling behind the curve, according to Mohamed El-Erian.

“The Fed pivoted on the basis of data. It was the opposite of the pivot that they did in December — now they have to do a U-turn,” El-Erian, the president of Queens’ College, Cambridge and a Bloomberg Opinion columnist, told Bloomberg Television on Friday. “As they are doing the U-turn and stay higher for longer, the market is going the other way.”

 https://www.bloomberg.com/news/articles/2024-05-17/el-erian-says-fed-s-higher-for-longer-u-turn-at-odds-with-market