A well-known global economist said: Mohammed Al-ArianInvesting in stock markets certainly has value in some very interesting individual names, but you can’t avoid the macro factors influencing the markets right now.
Al-Arian added, in an interview with “CNBC” last Friday, that individual names should be avoided at this time, because all are influenced to a large extent by what goes on in the market, although some of them are of great value. future.
In a related context, Al-Arian told CNN that interest rates that rise faster and last for a longer period, as well as the high risk of an economic downturn, could have been avoided had the Federal Reserve acted. early to curb inflation.
His comments came after the Federal Reserve on Wednesday raised interest rates by 0.75 percentage points for the third time in a row to counter the rise in prices in US markets, as higher interest rates discourage l debt, thus holding back demand across the economy, but the move risks slowing growth to the point that the economy could slide into recession.
“The high risks of recession could have been avoided if the Fed had responded in time to calm inflation,” El-Erian tweeted on Twitter following the announcement of the Fed rate decision.
The Federal Reserve has already raised interest rates five times this year, with larger increases occurring at a faster pace in recent months as the bank scrambles to rein in inflation, which last June it hit a 40-year high of 9.1%, while inflation eased in the following months but remained up at 8.3% last August.
“Instead of leading the markets in the fight against inflation, the Fed had to follow him,” El-Erian wrote in a separate CNN editorial published Wednesday before the central bank rate announcement. and global economy “.
El-Erian added that the situation has caused a lot of confidence in the central bank to be lost and there is a risk that politicians, businesses and households may see the Fed as “part of the problem rather than part of the solution”.
“A growing number of economists warn that the Fed will push the United States into recession; a growing number of foreign policy makers complain that the strongest and most systemically important central bank in the world is pulling the carpet out of a ‘already fragile global economy, “El-Erian said …
Jerome Powell, the current Federal Reserve chairman, admitted in a congressional hearing in March that the central bank should have acted sooner.
“Hindsight says we should have acted sooner, as the supply-side recovery is taking much longer than we thought,” Powell said. Powell warned last month that slowing inflation “would bring some pain to households and businesses.”
Interestingly, El-Erian is Senior Advisor to Allianz and President of Queen’s College at the University of Cambridge in Great Britain, and previously was CEO of the giant “Pimco” firm specializing in US bond funds.