Economist: Federal Reserve made a mistake on Biden inflation

FILE - People transport a television to their car after shopping during a Black Friday sale at a Best Buy store on Friday, Nov. 26, 2021, in Overland Park, Kan. Prices for U.S. consumers jumped 6.8% in November compared with a year earlier as surging costs for food, energy, housing and other items left Americans enduring their highest annual inflation rate since 1982. (AP Photo/Charlie Riedel, File)

FILE – People transport a television to their car after shopping during a Black Friday sale at a Best Buy store on Friday, Nov. 26, 2021, in Overland Park, Kan. Prices for U.S. consumers jumped 6.8% in November compared with a year earlier as surging costs for food, energy, housing and other items left Americans enduring their highest annual inflation rate since 1982. (AP Photo/Charlie Riedel, File)

OAN Newsroom
UPDATED 10:09 AM PT – Monday, December 13, 2021

Economist Mohamed El-Erian is criticizing the Federal Reserve for failing to tackle inflation. During an interview Sunday, he said the U.S. has not yet reached peak inflation and it could go higher from last month’s reading of 6.8 percent.

Meanwhile, Fed chair Jerome Powell admitted Joe Biden’s inflation is persistent and not transitory as growth in prices hit its highest in 39-years. El-Erian said the Fed’s credibility has suffered due to this inconsistency.

“The Fed must quickly, starting this week, regain control of the inflation narrative and regain its own credibility,” he stressed. “Otherwise, it will become a driver of higher inflation expectation that feed onto themselves.”

El-Erian pointed out the Fed never expected inflation to approach 7 percent and he called it a “mischaracterization.” The economist said the Central Bank must admit its mistake and put every effort into fighting inflation before it’s too late.

Meanwhile, a former adviser to Barack Obama’s Treasury Department, Steve Rattner, said it will likely take several years to fix Biden’s inflation.

“So it is going to be painful and it’s going to be painful for growth, it’s going to be painful for jobs and we do have an election coming next year which is gonna be complicated,” he stated in a recent interview.

Rattner compared Biden’s economy to the inflationary wave of the late 1970s, saying back in the day it took a recession and several painful years to bring prices back to normal. He added, it’s not yet clear whether Biden’s economy is going that direction.

Rattner also criticized Biden’s latest spending bill while suggesting it may create more problems.

“I wouldn’t call it a tragedy, but I would call it a significant disappointment to pass legislation like this that doesn’t really address the revenue side properly in so many ways,” he continued. “We’re not raising individual tax rates, we’re not dealing with the estate tax problems. There’s so much missing from it and that’s really quite unfortunate.”

Rattner also said the Federal Reserve will have to raise borrowing costs next year, which may help address inflation but it poses risks to economic growth going forward.

MORE NEWS: Brazen Thieves Snatch Millions In Broad Daylight