Mohamed Aly El-Erian, the Chief Economic Advisor at Allianz SE.
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On Friday, Allianz’s Chief Economic Advisor Mohamed El-Erian cautioned that the extensive array of import tariffs imposed by President Donald Trump could jeopardize the U.S. economy, increasing the risk of recession.
He mentioned that the set of reciprocal tariffs could have a profound impact on the global economy.
“We’ve witnessed a significant reassessment of growth expectations, raising the likelihood of a recession in the U.S. to 50%. Additionally, inflation expectations have surged to 3.5%,” he conveyed to CNBC’s Silvia Amaro during the Ambrosetti Forum in Cernobbio, Italy.
“While I don’t believe a U.S. recession is unavoidable due to the robust structure of the economy, the risks have certainly escalated to an uncomfortable level.”
El-Erian also pointed out that markets may be underappreciating the inflationary effects of the tariff policies.
“The initial response has centered around concerns regarding growth. We have yet to see the implications for growth in other nations, which raises questions about the potential continuation of dollar weakness, and subsequently, the Federal Reserve’s response,” he remarked.
“If we are fortunate, we might see one rate cut rather than four, and it wouldn’t be surprising if we ended up with none,” El-Erian mentioned.
“If this were a standard Fed — and I emphasize this distinction heavily, as the Fed has not been standard lately — we would likely not even see a single rate cut.”
This developing story is being updated.
