El-Erian warns disinflation will not continue, sees cost pressures build

  • Speaking on Bloomberg, Mohamed El-Erian said that he does not expect disinflationary trends to continue, citing 2 cost-push pressures.
  • First, El-Erian cited restricted shipping in the Red Sea driving container costs up and restricting supply of key products.
  • Secondly, El-Erian cited tight labor markets and high wage pressures.
  • El-Erian sees inflation getting stuck at 3%.  He also noted that New York fed president John Williams began using the phrase ‘Long-Term,” indicating that the fed may allow inflation to remain above target for a period of time.

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