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Allianz chief economic adviser Mohamed El-Erian said the goal and responsibility for fighting inflation lies with the Federal Reserve, not federal gasoline tax exemptions. In “America Reports” on Thursday, El-Erian warned that America could “get stuck” with inflation unless the Fed takes an aggressive and proactive approach to rising costs.
BIDEN’S MOVE TO SUSPEND GASOLINE TAX CLASSIFIED AS ‘LITTLE SERIOUS’ SOLUTION BY OIL AND GAS ASSOCIATION PRESIDENT
MOHAMED EL-ERIAN: Inflation is high. It hurts everyone. And this administration, like many other segments of society, wants to be seen to be doing something. I am in the camp that it will not change much. Right now, the responsibility should lie with the Federal Reserve. They have to pull themselves together. They need to do a better job of containing inflation expectations. And that’s what’s going to determine where inflation goes from here.
So, ironically, the situation is improving for the wrong reasons. International oil prices – they are falling. They are falling because demand is falling because people are worried about the higher likelihood of a recession. I think you have to be very careful when talking about these things. There are five distinct reasons why we have an inflation problem. Their importance has varied over time, and what is at stake today, I repeat, it’s about the fed. If we’re not careful, the other reasons will fade out of the system, and we’ll get stuck with inflation again because there’s going to be a new driver and that’s inflation expectations.
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