Allianz SE chief economic advisor and Bloomberg Opinion columnist Mohamed El-Erian has called on the Federal Reserve to implement a 25 basis point hike during its upcoming policy meeting on Tuesday. According to El-Erian, an interest rate hike of 25 basis points enables the central bank to adequately tackle the ongoing banking crisis while combatting inflation.
“The worst thing they can do is blink in the eye — in the front of financial instability,” El-Erian said during an appearance on “Fox News Sunday”. He went on to defend his stance on a 25 basis point hike, explaining that it is necessary “because we have an inflation problem and we need to get over this inflation problem.”
El-Erian added that it is important for the Federal Reserve to reassure the public that it possesses multiple tools with which to battle financial issues, including mechanisms to both tackle stability in the banking sector as well as ongoing inflation.
Federal Reserve policymakers are set to meet on Tuesday for their next two-day policy meeting. This will the first time that the Fed will regroup following the collapse of Silicon Valley Bank and the financial uncertainty surrounding Credit Suisse.