Prince said Finance News: After the Federal Reserve aggressively raised interest rates, more and more economics and institutions have also begun to issue warnings, including Allianz chief economist Mohamed El-Erian.
Just on Tuesday (11th), Erian said in an interview that the Fed aggressive interest rate hike is useless because it still cannot repel the difficult inflation (US).
In addition, the well-known economist also "scared" that the Fed made two mistakes that are enough to be remembered by history, and triggered a "completely avoidable" economic recession in the United States.
So what are the 2 errors?
In this regard, Erian said that the first mistake made by the Federal Reserve is to regard the U.S. inflation as "temporary", and also convey the idea that "you don't have to worry" to the market;
Regarding this, Wang Ye said that Finance has reported it many times before. Since last year, the Federal Reserve has publicly stated many times that the high inflation in the United States is only temporary, and it has frequently "pleaded" the market, believing that there is no need to worry.
However, this year, as energy prices rise and the cost of living for Americans soar, the Federal Reserve "accepted" its mistakes and began to raise interest rates aggressively, responding with three consecutive interest rate hikes (75 basis points).
In addition, Erian also believes that the second mistake of the Federal Reserve is: after admitting that inflation will continue to occur and remain high, it did not take any meaningful action.
Erian compared (US) monetary policy to "drive". In the past period of time, loose monetary policy "stomp on the accelerator", which means they (the Federal Reserve) have to step on the accelerator again this year, and "this will cause the United States to fall into an economic recession."
Regarding this, International Monetary Fund also lowered the GDP forecast for the United States in 2023. According to the specific data of
, IMF predicts that in 2022 and 2023, the US GDP growth rate will be 1% and 1.6%, respectively, the same as July expectations and a decrease of 0.7 percentage points respectively. [See our previous article "IMF forecast: In 2022, the global GDP growth rate may be 3.2%, and Japan's 1.7%! What about China and the United States? 》】
Finally, Erian also warned: "Unfortunately, these mistakes will lead to the emergence of major failed policies, just like the Fed's family, Powell, has gone from pursuing 'soft landing' to discussing pain. This is the crux of the problem, and it is also the price of Fed's 'late' . They must overcome inflation and need to restore the market's credibility in them."
It is worth mentioning that Wang Ye said that the finance noticed that next, the degree to which the Fed's interest rate hike still depends on a key data, that is, the US consumer price index (CPI) in September.
This data will be released on Thursday (13th). If the U.S. inflation trend fails to ease, the market predicts that the Federal Reserve will announce another interest rate hike at its interest rate decision meeting in November, and the range may be as high as 3 codes. If so, this will be the sixth time the Federal Reserve has raised interest rates this year, with 3 codes hikes for four consecutive times.
What do you think about this? What do you think will be the US economy next? Will the Fed continue to raise interest rates aggressively?
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