The US economy is facing the ultimate 'trilemma' as the Fed desperately tries to get inflation down, Mohamed El-Erian says
The Federal Reserve is facing three major obstacles, and recent banking turmoil is making its job of tackling them more difficult, Mohamed El-Erian said.
But El-Erian, who is the chief economic adviser at Allianz, said the banking sector is not suffering from a crisis but is instead seeing"tremors," adding that what many have referred to as a credit crunch is more like a contraction. The credit contraction will have a similar effect on the economy that Fed rate hikes do, equivalent to about 25 to 50 basis points, El-Erian estimated.
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