Mohamed El-Arian Warns The Fed Will Further Hike Interest Rates to 3%

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Mohamed El-Erian
Mohamed El-Erian

Top economist Mohamed El-Erian said investors should brace for interest rates to climb higher, rise faster, and last longer. He also warned that Russia’s latest escalation in its war with Ukraine further weighs down on the markets. 

“The likely 75 bp hike, and the forecasts and signaling that come with it, will be part of the HFL policy paradigm in the advanced world—higher, faster and for longer on rates,” he tweeted on Wednesday. “The related complexities have been accentuated by the Russia news just now.”

The Allianz’s chief economic adviser said that the Federal Reserve could hike its benchmark rate by 75 basis points to between 3% and 3.25% later on Wednesday. The US central bank is also expected to pencil in further increases as it seeks to tame inflation, which blasted above a 40-year high in June.

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Meanwhile, Russian President Vladimir Putin on Wednesday ordered the mobilization of around 300,000 more troops to support his invasion of Ukraine and hinted he would use nuclear force if he has to.