The Fed should not have let investors take a June pause in rate hikes before confirming the May jobs report, said Mohamed El-Erian, Bloomberg Opinion columnist and chief economic adviser to Allianz.
El-Erian told Bloomberg Television: “Between now and the next CPI release, people will be perplexed as to why the Fed has steered the market so strongly towards a pause in rate increases.” he said. The comments came after the number of employees in May exceeded market expectations.
US Employment Numbers Exceed Expectations;
Employment in the United States in May increased by 339,000 from the previous month. The figures for April have been revised upwards. Meanwhile, the unemployment rate rose to 3.7% and average hourly earnings slowed. El-Erian added that this was the 14th consecutive month that job growth outperformed, and that the US economy remains the main engine of job creation, which is good news.
“I think it’s an illusion to think that one month’s data makes a big difference, but the authorities have created such a framework. It’s a shame,” he said.
“If the Fed is serious about its 2% inflation target, the data suggests they should raise rates,” he said. “This is because the authorities are taking a data-hungry stance, and that data is better than expected,” he added.
news-rsf-original-reference paywall">Original title:El-Erian Says Fed Has Message Problem After Early Pause Signals (抜粋）