El-Erian Say Fed ‘Forced’ Central Banks to Ease Policy – Bloomberg 03-15-13

Salient to Investors:

Mohamed El-Erian at Pimco said:

  • The Fed’s record monetary stimulus has forced central banks from Mexico to Brazil to Korea to Japan to follow suit as artificially low US interest rates has put upward pressure on several currencies, threatening the competitiveness of their economies.
  • Central banks are carrying the majority of the policy burden, not by choice but by perceived necessity.
  • The Fed has become the equity investors’ best friend and a price-setter in financial markets.
  • Bernanke pivoted in 2010 and started using imperfect tools, leaving the balance of benefits and costs unclear.
  • The longer-term outlook is unusually uncertain with a major, major fork awaiting investors.
  • Either the economy will successfully make a transition from a state of assisted growth to genuine growth, or the expansion will fall short of reaching escape velocity as benefits of Fed no longer outweigh the costs.

Read the full article at http://www.bloomberg.com/news/2013-03-15/el-erian-say-fed-forced-central-banks-to-ease-policy.html

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