(Bloomberg) - Mohamed El-Erian called on the Federal Reserve to raise its main interest rate by 25 basis points at this week’s meeting and couple the move with an assurance of its commitment to financial stability.
“The worst thing they can do is blink in the eye — in the front of financial instability,” El-Erian, chief economic adviser at Allianz SE and a Bloomberg Opinion columnist, said on “Fox News Sunday.”
A 25 basis-point increase is needed “because we have an inflation problem and we need to get over this inflation problem,” he said. At the same time, the Fed needs to remind people “credibly that we have multiple tools — interest rate policy to deal with inflation and other tools to deal with financial stability.”
Fed policy makers begin a two-day meeting on Tuesday, the first since the collapse of Silicon Valley Bank and the resulting fallout shook markets and fueled speculation that the US central bank might pause its rate increases.
By Tony Czuczka
