Allianz chief economic advisor Mohamed El-Erian told Kitco News that since the Fed was late in starting its inflation fight, gold will reap the benefits. On Tuesday, Atlanta Fed President Raphael Bostic voiced his concerns about the impact the Fed rate hikes could have on our nation’s economic recovery. He feels the central bank shouldn’t move so fast that it chokes off growth.
Kitco News/Anna Golubova
Will the Fed raise its inflation target? Here’s what that means for gold price and crypto, says El-Erian
When it comes to inflation, the Federal Reserve has miscalculated, and the only way out might be for the central bank to raise its inflation target from 2% to 3%, said Allianz chief economic advisor Mohamed El-Erian.
The Federal Reserve has waited too long to respond to problematic price pressures.
“It’s not going to be an easy way out, and it is going to be incredibly controversial. But that’s what you get when you wait too long to recognize what inflation is and to take action. We should have started QT [quantitative easing] last year. We didn’t. And now we bear the consequences of the Fed being so late,” El-Erian told CNBC Monday.
What this will mean for the gold and crypto markets is that “they both go higher in a world like that,” he explained.
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Fed’s Bostic expresses caution about the pace of interest rate hikes
Atlanta Federal Reserve President Raphael Bostic on Tuesday expressed concern about the impact that rate hikes could have on the U.S. economic recovery, saying the central bank shouldn’t move so fast that it chokes off growth.
Bostic did not commit in a CNBC interview to what pace the Fed should take in increasing benchmark rates. Instead, he said policymakers should be measured in their approach and watch how what they do impacts conditions.
“I think I’m in the same areas as my colleagues philosophically,” he told CNBC’s Sara Eisen in a “Closing Bell” interview. “I think it’s really important that we get to neutral and do that in an expeditious way.”
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CNN Business/Julia Horowitz
IMF says Russia’s war in Ukraine will ‘severely set back’ global economy
The International Monetary Fund has slashed its expectations for global economic growth over the next two years because of Russia’s invasion of Ukraine, comparing the ripple effects from the conflict to an “earthquake.”
“The economic effects of the war are spreading far and wide,” the organization said in its latest outlook, published Tuesday.
The IMF now expects the world economy to expand by 3.6% in both 2022 and 2023, a sharp deceleration from growth of 6.1% in 2021. The new forecasts reflect downgrades of 0.8 and 0.2 percentage points, respectively, from its January forecast.
The World Bank also slashed its global growth forecast this week. It now expects the world economy to expand
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