The economist Mohamed El-Erian has criticized the Federal Reserve for how poorly it has dealt with inflation, and he warned about the United States slipping into stagflation if policymakers do not deal with the issue carefully.
Because of having “badly misdiagnosed” inflation last year, the Federal Reserve “significantly intensified” its policy response in the last few months, El-Erian wrote in an op-ed at Bloomberg on Oct. 24. In just six months, he noted, policymakers raised interest rates by 3 percentage points, which is the Fed’s “most front-loaded one in a long time.” Sharp appreciation in the value of the U.S. dollar and the cooling down of the housing market are some of the consequences of these actions, the economist pointed out….