Renowned economist Mohamed El-Erian has expressed his concerns about the current state of the US economy, suggesting that it is slowing down at a faster pace than predicted by the Federal Reserve (Fed). In an interview with Bloomberg Television, El-Erian emphasized the importance of considering all available data, which he believes shows clear signs of an economic slowdown and loss of momentum. He argued that it is necessary to start discussing a reduction in interest rates as early as next month.
El-Erian stated, “If you look at the data as a whole, the economy is slowing, and it is slowing faster than most economists expected and certainly faster than the Fed expected.” He also highlighted that there is limited room for maneuver as personal savings and debt capacity have already been depleted.
El-Erian suggested that a proactive Fed would consider the possibility of a rate cut in July. However, he expressed concerns about the disparity between what he believes the Fed should do and what it is likely to do. He commented, “If I were them, I would seriously consider July as a live meeting. I don’t think that’s currently the case. In fact, I think there is uncertainty in the market.”
El-Erian concluded by stating that the Fed heavily relies on historical data to make necessary changes, resulting in delays. He said, “It takes a lot of historical data to get them to change.”
