About Mohammed El-erian
Mohamed El-Erian, chief economic advisor at Allianz and a professor at the Wharton School, has appeared on CNBC multiple times in recent months to discuss the economic impact of geopolitical conflicts, inflation, and Federal Reserve policy. He stated that the U.S. economy has so far avoided "demand destruction" from the Middle East war, but warned that the next phase of the shock would involve affordability issues severe enough to reduce consumer spending. He described the current economic environment as having four phases: higher energy prices, broader inflation, demand destruction, and potential financial instability. El-Erian said he is "really worried" about the UK, noting that the 10-year yield above 5% is "crippling for mortgages and for businesses" and makes government debt more explosive.
Regarding the Federal Reserve, El-Erian said he expects the Fed to "sit on their hands" and not cut rates for most of the year, and that a rate hike is more likely than a cut. He suggested the Fed is tolerating a 3% inflation target rather than 2%, as long as inflation expectations remain stable. On Fed Chair nominee Kevin Warsh, El-Erian said he believes Warsh will "err on the side of lowering rates earlier" than the current Fed would, citing Warsh's belief in the productivity enhancement of AI. El-Erian also expressed concern about the volume of funding needed from capital markets, citing large IPOs, government deficits, and corporate borrowing for AI investment, and said he cannot identify where all the money will come from, predicting it will push borrowing costs higher.
Source: AI-verified profile updated from Mohammed El-erian's recent appearances.
Browse all interviews →
✨ AI-enhanced transcript with speaker attribution
M
Maria Bartiromo0:01
Uranium on global markets said it will pick up speed to fill that up 2.5% right now. Joining me is Chief Economic Adviser Mohamed El-Erian. Good to see you. Thank you for being here. One important point is the return of volatility.
M
Mohammed El-erian0:21
I see it as a good thing. Long-term investors should be happy. We are exiting what was a very unusual regime of the last few years, a very repressive one where everybody was afraid. Once that changes, how will markets behave? Guess what, we've had now five months of that, and markets are functioning well.
M
Maria Bartiromo0:42
I want to ask about the Federal Reserve, your reaction to what took place yesterday. The U.S. pulling out of the Iran nuclear deal. Saudi Arabia now is saying it's trying to diversify its economy, dependence on oil revenue not just dollars and cents. Crown Prince Mohammed bin Salman told me in Riyadh.
M
Mohammed El-erian1:05
Prior to '79, that entire region you had, for many reasons. Today is not the right day to discuss them. We only want to go back to what we were, moderate, open to the world, open to all refugees.
M
Maria Bartiromo1:32
We got breaking news. The President tweeted this: Mike Pompeo has hostages. I am pleased to inform you Secretary of State Mike Pompeo is in the air on his way back from North Korea with three wonderful gentlemen. Everyone is looking so forward to meeting them. A good meeting with Kim Jong-un. Date and place has been set for the President's meeting with the head of North Korea. Wow, Mike Pompeo went to North Korea and he is delivering those three hostages that have been in Iran for years. Mohamed, this is big news.
M
Mohammed El-erian2:06
That is wonderful that hostages are coming back. Wonderful progress. And it tells you the markets' reaction to Iran yesterday is, I think markets have understood that these are part of a process what economists call multi-gains can have good outcomes. That is where the markets are reacting the way it is today. The announcement news from Korea, wonderful.
M
Maria Bartiromo2:33
I want to ask your take on the economy right now. I was noticing the Baltic Dry Index, a shipping index that tracks the cost of transporting raw materials, up 50% since the beginning of last month. It has been surging past the 1400 level overnight. This is typically a market indicator, economic indicator, isn't it, Mohamed? Look at the surge last month.
M
Mohammed El-erian2:56
The U.S. economy is doing fine. If you like, running on all cylinders. Consumption, government spending, fine. Doing great. The problem, Maria, is that the rest of the world is no longer gaining traction, starting to slow.
M
Maria Bartiromo3:18
A while we were saying this is the first time all global economies are synchronized, you are saying things are diverting.
M
Mohammed El-erian3:28
We saw correlated growth get expedited, synchronized, feed on each other. But growth for different reasons. U.S. policy-led in response to deregulation. Europe, natural healing process, come out of the hospital, walk a little bit better. You can't run structurally impaired Brazil from that. Commodities all came together, happy coincidence. Now...
