(Bloomberg) — Mohamed Al-Arian called on the Federal Reserve to raise its key interest rate by 25 basis points at this week’s meeting and step in with reassurances of its commitment to financial stability.
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“The worst thing they can do is blink — in the face of financial volatility,” El-Arian, chief economic advisor at Allianz SE and Bloomberg Opinion columnist, said on “Fox News Sunday.”
He said the 25 basis points increase is needed “because we have an inflationary problem and we need to address this inflationary problem.” At the same time, the Fed needs to “credibly remind people that we have many tools at our disposal – interest rate policy to deal with inflation and other tools to deal with financial stability.”
Fed policymakers began a two-day meeting on Tuesday, the first since the collapse of the Silicon Valley bank and its resulting fallout roiled markets and fueled speculation that the US central bank could freeze its rate hikes.
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