- Mohamed El-Arian has again criticized Powell’s Fed, saying it will be remembered for more bad than good.
- The central bank will be remembered more for damaging its own credibility than for controlling inflation, he added.
- El-Arian has been a fervent critic of the Fed’s approach towards dealing with high US inflation.
The Jerome Powell-led Federal Reserve will be remembered more for undermining its credibility than for taming inflation, according to top economist Mohamed El-Arian.
“There has been much debate about whether a Powell-led Fed is destined to conquer inflation alongside the (Paul) Volcker Fed or to stagnate alongside the (Arthur) Burns Fed,” the top economist said. Will be missed for opening the door.” A Project Syndicate op-ed published this week.
“My concern is that it could be relegated to a category of its own, as the Fed undermines its credibility, its political autonomy, and the vital anchoring role of the US at the center of the global economy.”
El-Arian has repeatedly criticized Powell’s Fed, blaming them for failures over the past few years in dealing with high US inflation. He slammed the Fed for acting too late to tame inflation as he dismissed rising prices in 2021 as a “fleeting” event, and then highlighted an aggressive monetary-tightening campaign that has Ignited fears of a recession.
El-Arian said, “At this point, it cannot be denied that the world’s most powerful central bank has slipped in its analysis, forecasting, policy making and communication. This is bad news.”
However, there is room for correction by adopting a better strategic approach to the Fed’s analysis and actions, said the chief economic advisor at Allianz.
El-Arian also recently warned that the Fed is currently grappling with a complex “trilemma” of problems – including inflation, growth risks and financial stability issues – adding that “there is no longer a first best policy response”. “
The post Powell’s Fed May Be Remembered Not For Overcoming Inflation But For Undermining Its Own Credibility, Says Mohamed Al-Arian appeared first on Stars Daddy.