El-Erian: "US Inflation Could Rise Up to 10% This Summer"

Mohamed El-Erian, Chief Economic Adviser at Allianz [Photo by Bloomberg]

[Asia Economy Reporter Byunghee Park] Mohamed El-Erian, Chief Advisor at Allianz, predicted that the U.S. consumer price inflation rate could rise to 10% this summer.

El-Erian appeared on CBS's "Face the Nation" program on the 13th and said that prices would rise further due to the aftermath of Russia's invasion of Ukraine, according to a report by Bloomberg News on the same day.

He expects the U.S. inflation rate to peak around 10%, and if it reaches double digits, that point will likely be this summer.

The U.S. consumer price inflation rate for February was recorded at 7.9%.

El-Erian criticized the U.S. central bank, the Federal Reserve (Fed), for responding too late to inflation. He predicted a 0.25 percentage point interest rate hike at the Fed's Federal Open Market Committee (FOMC) meeting on the 15th-16th, as Fed Chair Jerome Powell has already publicly expressed support for such a move.

However, El-Erian pointed out, "The Fed's response is too late, and there are no good options left to use."

He diagnosed that the U.S. economy will not be able to avoid stagflation. On the other hand, he said a recession can be avoided and predicted a sharp rebound following an economic slowdown.

Stagflation refers to a situation where inflation rises while growth slows down, and a recession typically means two consecutive quarters of declining gross domestic product (GDP).

This content was produced with the assistance of AI translation services.