{"id":17826,"date":"2023-02-19T03:34:03","date_gmt":"2023-02-19T03:34:03","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/economist-warns-the-fed-cant-reach-inflation-target-without-crushing-us-economy-economics-bitcoin-news\/"},"modified":"2023-02-19T03:34:03","modified_gmt":"2023-02-19T03:34:03","slug":"economist-warns-the-fed-cant-reach-inflation-target-without-crushing-us-economy-economics-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/economist-warns-the-fed-cant-reach-inflation-target-without-crushing-us-economy-economics-bitcoin-news\/","title":{"rendered":"Economist Warns the Fed Can’t Reach Inflation Target Without ‘Crushing’ US Economy \u2013 Economics Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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Economist Mohamed El-Erian, Allianz\u2019s chief economic advisor and chair of Gramercy Funds Management, has warned that the Federal Reserve cannot achieve its 2% inflation target without crushing the U.S. economy. \u201cYou need a higher stable inflation rate. Call it 3% to 4%,\u201d the economist suggested.<\/strong><\/p>\n

The Fed Could Crush US Economy, Economist Warns<\/h2>\n

Economist Mohamed El-Erian warned on Friday that the Federal Reserve cannot achieve its inflation target of 2% without \u201ccrushing the economy.\u201d El-Erian is president of Queens\u2019 College, Cambridge University, and chair of Gramercy Funds Management. He is also chief economic adviser at Allianz, the corporate parent of PIMCO, one of the largest investment managers.<\/p>\n

\u201cYou need a higher stable inflation rate. Call it 3% to 4%,\u201d the economist stressed in an interview with Bloomberg Television. He emphasized:<\/p>\n

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I don\u2019t think they can get CPI to 2% without crushing the economy, but that\u2019s because 2% is not the right target.<\/p>\n<\/blockquote>\n

El-Erian\u2019s comments followed the government\u2019s consumer price index (CPI) data released Tuesday. On a month-by-month basis, prices increased by 0.5% in January, the most since October. On an annual basis, consumer prices climbed 6.4% in January, down from 6.5% in December. Following the CPI report, several Fed officials said the U.S. central bank may have to raise interest rates beyond initial expectations in order to subdue the ongoing price pressures.<\/p>\n

The Allianz economic advisor explained that there are several factors that necessitate a higher target inflation rate. They include supply-side developments, including an energy transition, the change in supply chains during the pandemic, a tight labor market, and shifting geopolitical issues.<\/p>\n

El-Erian said the Federal Reserve is \u201ctoo data dependent.\u201d Noting that \u201cIt\u2019s right to take data into account but you\u2019ve got to have a view of where you\u2019re going,\u201d he cautioned that the problem now is that the Fed is stuck chasing an elusive 2% goal. In January, El-Erian predicted<\/a> that inflation may become \u201csticky\u201d around the 4% range.<\/p>\n

The economist previously warned that the Federal Reserve could lose credibility if it changes the inflation Target. He opined:<\/p>\n

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You can\u2019t change an inflation target when you\u2019ve missed it in such a big way.<\/p>\n<\/blockquote>\n

Do you agree with the economist that the Fed cannot achieve its 2% inflation target without crushing the U.S. economy? Let us know in the comments section below.<\/strong><\/em><\/p>\n

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\nKevin Helms <\/h6>\n

\nA student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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

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