Powell's Fed may be remembered not for conquering inflation but for undermining its own credibility, Mohamed El-Erian says

• Mohamed El-Erian has slammed Powell's Fed again, saying it'll be remembered more for the bad than the good.
• The central bank will likely be remembered more for damaging its own credibility than for taming inflation, he said.

The Federal Reserve led by Jerome Powell will likely be remembered more for undermining its own credibility than for taming inflation, according to top economist Mohamed El-Erian.

"There has been much debate about whether the Powell-led Fed will be remembered alongside the (Paul) Volcker Fed for having conquered inflation, or alongside the (Arthur) Burns Fed for having opened the door to stagflation," the top economist said in a Project Syndicate op-ed published this week.

"My worry is that it may end up being remembered in a category of its own, as the Fed that undermined its own credibility, its political autonomy, and America's crucial anchoring role at the center of the global economy," he added.

El-Erian has repeatedly criticized Powell's Fed, blaming them for a string of failures over the past couple of years in tackling high US inflation. He's slammed the Fed for acting too late to tame inflation as they dismissed rising prices as a "transitory" phenomenon in 2021, and then unleashing an aggressive monetary-tightening campaign that has ignited fears of recession.

"At this point, there is no denying that the world's most powerful central bank has slipped in its analysis, forecasts, policymaking, and communication. That is the bad news," El-Erian said.

However, there's room for the Fed to make right by adopting a better strategic approach for its analysis and actions, the Allianz chief economic advisor added.

El-Erian has also recently warned that the Fed is currently juggling a complicated "trilemma" of problems, including inflation, growth risks and financial stability issues – saying that "there is no first best policy response anymore."