Mohamed El-Erian, the Chief Economic Advisor at Allianz, criticized the Federal Reserve for not reducing interest rates in July, warning that the market's anticipation of a 200 basis point cut in the next year is excessive.
What Happened: El-Erian stated that the Fed should have cut rates in July and that the lack of clarity about the future rate cuts is causing market uncertainty. El-Erian voiced his concerns on CNBC's Closing Bell on Tuesday.
"But there's also the question of the destination...They've been ambiguous about that. The market is expecting 200 basis points in the next 12+ months. That would be too much," El-Erian said.
El-Erian predicted a 25 basis point rate cut by the Fed in September. He also highlighted the significance of the upcoming Jackson Hole symposium for Fed Chair Jerome Powell to regain control of the narrative. El-Erian says the market should expect a 150 basis point rate cut by the Fed in the next 12+ months.
"[The Fed] should have cut in July," says @elerianm. "But there's also the question of the destination...They've been ambiguous about that. The market is expecting 200 basis points in the next 12+ months. That would be too much." pic.twitter.com/CVL0bpsh07
— CNBC's Closing Bell (@CNBCClosingBell) August 13, 2024
Why It Matters: The Federal Reserve's decisions are under intense scrutiny as the economic landscape evolves. The July Consumer Price Index inflation report, due for release on Wednesday, could significantly influence investor expectations ahead of the Fed's September meeting.
If inflation slows more than expected, it could bolster the case for a larger rate cut, potentially 50 basis points, in September. Conversely, if inflation meets or exceeds expectations, it may signal a need for a more modest 0.25% rate cut.
Adding to the debate, Brad Case, Chief Economist at Middleburg Communities, argued that the Fed might not cut rates until November. He emphasized the need for sustained economic weakness before considering rate cuts, citing strong consumer spending and rising wages as reasons to maintain current rates.
Meanwhile, Bank of America CEO Brian Moynihan expressed concerns about the potential impact of the Fed's policy on consumer sentiment. He warned that a delay in rate cuts could erode consumer confidence, highlighting the delicate balance the Fed must maintain.
Prominent finance professor Jeremy Siegel also weighed in, urging the Fed to reduce rates swiftly to 4%, although he retracted his earlier call for an emergency rate cut. Siegel emphasized the need for a rapid yet measured approach to rate reductions.
安联首席经济顾问穆罕默德·埃里安批评美联储在7月份没有降低利率，并警告说，市场对明年降息200个基点的预期过高。
发生了什么：El-Erian表示，美联储本应在7月降息，而未来降息缺乏明确性导致了市场的不确定性。埃里安周二对CNBC的收盘钟表示担忧。
“但是还有目的地的问题... 他们对此一直模棱两可。市场预计未来12个月内将有200个基点。那太过分了，” 埃里安说。
埃里安预测美联储将在9月份降息25个基点。他还强调了即将举行的杰克逊霍尔研讨会对美联储主席杰罗姆·鲍威尔重新控制叙事的重要性。埃里安说，市场应该预计美联储将在未来12个月内降息150个基点。
@elerianm 说：“[美联储] 本应在7月削减开支。”“但是还有目的地的问题... 他们对此一直模棱两可。市场预计未来12个月内将有200个基点。那太过分了。” pic.twitter.com/cvl0bpsh07
— CNBC 的闭幕钟 (@CNBCClosingBell) 2024 年 8 月 13 日
为何重要：随着经济格局的演变，美联储的决定受到严格审查。将于周三发布的7月消费者物价指数通胀报告可能会在美联储9月会议之前对投资者的预期产生重大影响。
如果通货膨胀放缓幅度超过预期，则可能为9月份进一步降息（可能为50个基点）提供支持。相反，如果通货膨胀达到或超过预期，则可能表明需要更温和的0.25％降息。
米德尔堡社区首席经济学家布拉德·凯斯认为，美联储可能要到11月才会降息，这加剧了争论。他强调在考虑降息之前，需要持续的经济疲软，理由是强劲的消费者支出和工资上涨是维持当前利率的理由。
同时，美国银行首席执行官布莱恩·莫伊尼汉对美联储政策对消费者信心的潜在影响表示担忧。他警告说，延迟降息可能会削弱消费者的信心，这凸显了美联储必须保持的微妙平衡。
著名金融学教授杰里米·西格尔也参与其中，敦促美联储迅速将利率降至4％，尽管他撤回了先前提出的紧急降息呼吁。西格尔强调需要采取快速而谨慎的降息方法。
