Expect the Federal Reserve to lead markets rather than follow them, Mohamed El-Erian, chief economic advisor at Allianz, told CNBC on Thursday, a day after the Fed hiked interest rates for the second time in three months.
“There is an ongoing transition in Fed policy. This is a more confident Fed,” the former co-CEO of Pimco said on “Halftime Report.”
On Wednesday, the central bank increased its benchmark interest rate a quarter point amid rising confidence that the economy is poised for more robust growth.
The Fed indicated Wednesday that it still expects two more moves for the year, with the market expecting the next hike to come in June and another in December.
Government bond yields were lower while major averages in the stock market moved higher Wednesday following the Federal Open Market Committee statement.
“That is why people are calling it the ‘Goldilocks Fed,'” El-Erian said Thursday. “And that’s why I like to call it ‘the beautiful normalization of rates.’ You can normalize rates without disrupting risk assets.”
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