The Rising Influence of Rising Affluence

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The Fed is facing a lose-lose situation with either hot inflation or a recession, but high prices would be preferable, says Mohamed El-Erian

https://markets.businessinsider.com/news/bonds/federal-reserve-mohamen-elerian-inflation-recession-economy-prices-investors-2022-3

Volatility has seized markets since the Fed first signaled it would hike interest rates, but uneven messaging from the central bank has caused investors to become even more skittish.

El-Erian said the Fed keeps flip-flopping between hawkish and dovish signals, so he isn't sure what to expect. However, El-Erian said he'd err on the side of high prices over a recession as the preferred outcome of the Fed's actions.

"Now that you're in this position and you're going to end up making a mistake, which is a high probability outcome, I'd rather make a mistake of letting inflation persist than throw this economy into recession," El-Erian said.