Tags: El-Erian | Fed | Must | Consider | Oil | Inflation | Fight

El-Erian: Fed Must Consider Oil in Inflation Fight

Wednesday, 02 Mar 2011 02:45 PM

Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said the Federal Reserve may have to accommodate rising oil prices as it tackles inflationary pressures.

Fed Chairman Ben S. Bernanke “has the power to make sure that inflation stays contained,” El-Erian told Andrea Catherwood on Bloomberg Television’s “The Last Word.” “But he can only do that if he compensates for higher oil prices by lowering prices elsewhere. The health of the U.S. economy can’t take the deflation shock.”

Oil climbed above $100 a barrel in New York for a second day on concern that the unrest curbing exports from Libya will spread to other countries in the region.

“If this oil shock persists, then Mr. Bernanke will find it very difficult to control overall inflation,” El-Erian said. “He is going to accommodate some of the oil price shock because the economy is so weak.”

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Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said the Federal Reserve may have to accommodate rising oil prices as it tackles inflationary pressures. Fed Chairman Ben S. Bernanke has the power to make sure that inflation stays contained, ...
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Wednesday, 02 Mar 2011 02:45 PM
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