After U.S. Federal Reserve Chairman Jerome Powell indicated on Friday that the central bank may soon move towards cutting interest rates, following months of political pressure from President Donald Trump during his presidency to push the Fed towards easing monetary policy.
In a comment on these statements, prominent economist Mohamed El-Erian, chief advisor at Allianz, said Powell may have been late in taking proactive steps.
Al-Erian explained during his talk on the program 'Face the Nation' with Margaret Brennan that many economists believed the Federal Reserve should have started cutting interest rates earlier to support economic growth.
El-Erian added that the chairman of the U.S. Federal Reserve 'has relied heavily on current data,' which has made him 'tend to delay' his monetary decisions, emphasizing that reading the future and anticipating economic trends could have given the Fed more room to act earlier.
El-Erian's statements come at a time when investors are closely monitoring signals from the U.S. Federal Reserve, especially after recent data showed a gradual decline in inflation rates, yet with price levels remaining above target. Any decision to cut interest rates is considered highly impactful on financial markets and asset prices worldwide.
The ongoing debate among economists about the policies of the Federal Reserve reflects the challenges facing the central bank in balancing support for growth while maintaining price stability. While some believe it is time to ease monetary policy, others assert that inflationary risks have not yet sufficiently declined to justify a rapid interest rate cut.
