Well-known economist criticized Federal for "two major mistakes"
well-known American economist Mohamed Erian said that he believes U.S. Federal Reserve made "two major mistakes" and may trigger a "severe recession" of the US economy.
Erian is 64 years old and has dual nationality between the United States and Egyptian . He served as chairman of the Global Development Committee during the administration of former US President Barack Obama and is currently the chief economic adviser to Germany's Allianz Group.
On September 21, Federal Reserve Chairman Powell attended a press conference in Washington. Xinhua News Agency (photo by Alexander Norton)
Erian said on the CBS TV program "For the Nationwide" on the 9th that the Fed's first mistake was to misjudgment inflation as temporary; the second mistake was that after admitting that inflation will continue to rise, the Fed still acted "in meaningless way."
He used driving to say that the Federal Reserve monetary policy did not loosen the accelerator last year, which means that the brakes must be stepped on this year, and this method "will bring us into recession."
Data from the U.S. Department of Labor shows that since March this year, the U.S. monthly consumer price index (CPI) has increased by more than 8% year-on-year.
On September 13, customers shopped in a store in New York, USA. Data released by the U.S. Department of Labor on the same day showed that the U.S. Consumer Price Index (CPI) increased by 0.1% month-on-month in August this year and 8.3% year-on-year, and the year-on-year increase remained at a historical high. Xinhua News Agency (photo by Guo Ke)
US inflation rate remained at a 40-year high, and the Federal Reserve raised interest rates three times in a row 375 basis points. Bloomberg News predicted on the 9th that the Federal Reserve may raise interest rates by 75 basis points again next month.
Erian said: "I think we are facing extremely high possibility and are trapped in a serious recession that could have been completely avoided."
He said that even Fed Chairman Jerome Powell changed his words, changing from claiming to seeking a soft economic landing to talking about pain, "this is the problem, this is the price of the Fed's slow action. The Fed needs not only to overcome inflation, but also to reshape its credibility."
Speaking of the announcement of production cuts between the Organization of Petroleum Exporting Countries ( OPEC ) and non-OPEC oil-producing countries, he said that the decisions of major oil-producing countries did hurt the United States, "This is certainly not good news for the United States."
Major oil-producing countries decided to reduce production significantly from November this year on the 5th, reducing monthly output by 2 million barrels per day based on August production. The scale of this production cut is equivalent to 2% of the global average daily oil demand.
(Original title: The well-known US economist: The Fed made "two major mistakes"!)
Source: Xinhua News Agency
Process Editor: TF060
