Fed should 'go to the sideline' as economy continues coronavirus recovery: El-Erian
The economic recovery is more likely to be a "check mark" than a V-shaped recovery, he said
It's time for the Federal Reserve to "go to the sideline" as the U.S. economy continues its coronavirus recovery, Allianz Chief Economic Adviser Mohamed El-Erian said on Tuesday.
"The Fed has done a lot, and it’s time for it to go to the sideline and let this economy pick up," El-Erian told "Mornings with Maria." "Anything it does more comes at the cost of sacrificing future growth and sacrificing future financial stability."
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On Wednesday, the Fed is expected to share new economic projections for the first time since December as well as interest rate projections.
In this March 3, 2020 file photo, Federal Reserve Chair Jerome Powell pauses during a news conference in Washington. (AP Photo/Jacquelyn Martin, File) (Associated Press)
El-Erian does not expect the Fed to take more extreme measures to boost the economy but said some economists expect the central bank to express interest in yield curve control or even signal interest in negative interest rates.
"I think both would be a mistake," El-Erian said.
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The economic recovery is more likely to be a "check mark" than a V-shaped recovery, he said.
"Every short-term indicator — mobility, travel, everything — is pointing to the economy picking up," El-Erian said. "What is being debated, and rightly so, is the pace of recovery. And there is the view that it’s going to be a 'V,' or there’s a view it’s going to be a check mark, flatter in terms of how it comes back. I think it’s more of a check mark -- hoping for a V -- but it’s going to be more of a check mark because we have to fix a lot."
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