{"id":16780,"date":"2023-01-23T17:03:15","date_gmt":"2023-01-23T17:03:15","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/economist-mohamed-el-erian-predicts-sticky-inflation-despite-federal-reserves-efforts-to-bring-it-down-bitcoin-news\/"},"modified":"2023-01-23T17:03:15","modified_gmt":"2023-01-23T17:03:15","slug":"economist-mohamed-el-erian-predicts-sticky-inflation-despite-federal-reserves-efforts-to-bring-it-down-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/economist-mohamed-el-erian-predicts-sticky-inflation-despite-federal-reserves-efforts-to-bring-it-down-bitcoin-news\/","title":{"rendered":"Economist Mohamed El-Erian Predicts \u2018Sticky\u2019 Inflation Despite Federal Reserve’s Efforts to Bring it Down \u2013 Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
\n<\/p>\n

\n
\n<\/header>\n
\n<\/div>\n

As investors examine the next move of the Federal Reserve, analysts, economists and market participants are also closely monitoring inflation levels. In Dec. 2022, the annual inflation rate dropped to 6.5%, and many experts predict it will decrease further. However, economist Mohamed El-Erian of the University of Cambridge believes inflation will become \u201csticky\u201d in midyear, around 4%. The central bank, on the other hand, is primarily focused on reducing inflation to 2%.<\/strong><\/p>\n

5% Is the New 2%: Tight Monetary Policy and Interest Rate Hikes Unable to Curb Inflationary Pressure<\/h2>\n

Members of the Federal Reserve, including its 16th chair, Jerome Powell, have frequently stated that the bank\u2019s goal is to bring inflation down to 2%. Powell has emphasized<\/a> that the Federal Open Market Committee\u2019s (FOMC) \u201coverarching focus right now is to bring inflation back down to our 2% goal.\u201d To tame inflation, the central bank has used its monetary tightening policy and interest rate hikes. So far, the Fed has raised rates seven times<\/a> in a row since last year, with increases happening on a monthly basis.<\/p>\n

Inflation in the U.S. has decreased since approaching double digits in October and November 2022. At that time, economist and gold enthusiast Peter Schiff stated<\/a> that \u201cAmerica\u2019s days of sub-2% inflation are gone.\u201d At the 2023 World Economic Forum event in Davos, last week, JLL CEO Christian Ulbrich told<\/a> the Financial Times that his peers are starting to say that 5% will be the new 2%. \u201cInflation will persistently remain around 5%,\u201d Ulbrich said to the FT reporters. Mohamed El-Erian<\/a>, president of Queens\u2019 College at the University of Cambridge, explained on January 17 that inflation may become \u201csticky\u201d around the 4% range.<\/p>\n

\u201cStocks and bonds are off to an exuberant start to 2023, but there is still plenty of uncertainty about the world\u2019s growth, inflation and policy prospects,\u201d El-Erian wrote<\/a> in an op-ed article published on Bloomberg. \u201cThe improvement in U.S. growth prospects is being accompanied by a depletion of savings, which had benefited from the considerable fiscal transfers to households during the pandemic, and an increase in indebtedness,\u201d the economist added.<\/p>\n

El-Erian: \u2018Mounting Wage Pressure\u2019 to Spark Notable Change in Inflation<\/h2>\n

El-Erian further noted that the value of bitcoin (BTC)<\/a> has undergone a notable appreciation this year, and he attributes this to investors becoming more accepting of relaxed financial constraints and an increase in risk-taking attitudes. \u201cBitcoin is up some 25% so far this year thanks to looser financial conditions and larger risk appetites,\u201d the economist wrote.<\/p>\n

While the Federal Reserve aims to bring inflation back down to the 2% range, and some predict<\/a> the inflation rate will decrease to 2.7% this year and 2.3% in 2024, El-Erian anticipates an adhering predicament around the 4% range. \u201cIncreasing wage pressure\u201d is driving this change, El-Erian emphasized.<\/p>\n

\u201cThis transition is particularly noteworthy because inflationary pressures are now less sensitive to central bank policy action,\u201d the economist wrote. \u201cThe result could well be more sticky inflation at around double the level of central banks\u2019 current inflation target.\u201d<\/p>\n

\n
\nTags in this story
\n<\/h6>\n
Bitcoin<\/a>, Central Bank<\/a>, Christian Ulbrich<\/a>, economic growth<\/a>, economics<\/a>, Economist<\/a>, Federal Reserve<\/a>, financial conditions<\/a>, financial constraints<\/a>, FOMC<\/a>, indebtedness<\/a>, inflation<\/a>, inflation forecast<\/a>, inflation rate<\/a>, inflation targeting<\/a>, inflationary expectations<\/a>, Inflationary pressure<\/a>, inflationary prospects<\/a>, inflationary trend<\/a>, interest rate hikes<\/a>, Investors<\/a>, jerome powell<\/a>, JLL<\/a>, Mohamed El-Erian<\/a>, Monetary Policy<\/a>, Monetary Tightening<\/a>, Peter Schiff<\/a>, Queens’ College<\/a>, risk appetites<\/a>, risk-taking<\/a>, Savings<\/a>, university of cambridge<\/a>, wage pressure<\/a><\/div>\n<\/div>\n

Will inflation become \u201csticky\u201d around 4%, as economist El-Erian suggests? Share your thoughts in the comments below.<\/strong><\/em><\/p>\n

\n
\n<\/div>\n
\n
\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

\n
\n
\n<\/a>
\n<\/span>\n<\/p>\n<\/div>\n<\/div>\n

Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

\n

Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

\n