Fed’s Inflation Response Criticized

Mohamed El-Erian, chief economic adviser at Allianz SE, criticized the Federal Reserve’s long-standing narrative of transitory inflation on Friday following data that revealed prices are rising at the fastest rate since 1990.

“There are lots of structural changes going on in the post-pandemic economy … you can’t simply dismiss them as transitory,” El-Erian told Bloomberg in a TV interview on Friday. “So it is going to go down in history as one of the worst inflation calls by the Federal Reserve”, he added.

The Consumer Price Index gained 0.9% in month-over-month in October, the Bureau of Labor Statistics said Wednesday, far higher than economists’ expectation of 0.6%.

The reading marks an acceleration from the 0.4% gain seen in September and the largest one-month jump since 2008. Year-over-year, inflation at 6.2% is the highest in 30 years.