Economy

El-Erian warns of ‘cost-of-living crisis,’ says Fed rate hikes could cause recession

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The Federal Reserve’s efforts to fight inflation threaten to sink the U.S. into contraction, according to economist Mohamed El-Erian.

Following the U.S. central bank’s decision earlier this month to increase interest rates for the first time in more than three years, markets now expect the Fed to get even more aggressive.

Current pricing suggests a half percentage-point hike in May and a cumulative boost of 2.5 percentage points to benchmark rates through the end of the year, from the near-zero level where they started 2022.

Doing that could take a big toll on U.S. growth, said El-Erian, chief economist advisor at Allianz and president of Queens’ College, Cambridge.

“The bond market believes…



Source cnbc.com

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