--- title: "Allianz's chief accuses the Federal Reserve of being \"late\" again: making the same mistakes as during the inflation surge" type: "News" locale: "en" url: "https://longbridge.com/en/news/256332190.md" description: "Allianz Chief Economic Advisor Mohamed El-Erian criticized the Federal Reserve for failing to cut interest rates in a timely manner, arguing that it made the same mistake during the economic slowdown as it did during the inflation surge. He pointed out that the Federal Reserve should have cut rates in July but missed the opportunity due to Chairman Powell's narrow view of the labor market. The latest employment report shows that U.S. job growth was far below expectations, and the unemployment rate has risen, increasing concerns about a recession. El-Erian warned that the risks of the Federal Reserve's decision-making are greater than anticipated and called for a more aggressive interest rate cut strategy" datetime: "2025-09-08T07:34:45.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/256332190.md) - [en](https://longbridge.com/en/news/256332190.md) - [zh-HK](https://longbridge.com/zh-HK/news/256332190.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/256332190.md) | [繁體中文](https://longbridge.com/zh-HK/news/256332190.md) # Allianz's chief accuses the Federal Reserve of being "late" again: making the same mistakes as during the inflation surge Allianz Chief Economic Advisor Mohamed El-Erian publicly criticized the Federal Reserve last week, arguing that it failed to cut interest rates in a timely manner amid an economic slowdown, repeating the same mistake it made earlier when it was slow to raise rates during soaring inflation. El-Erian pointed out that the Federal Reserve has misjudged the situation again and is "late" in its decision-making. He believes they will cut rates in September, and he doubts whether the Federal Reserve is still discussing whether to cut by 25 or 50 basis points. He considers this another decision-making error by the Federal Reserve in recent years. At the end of the COVID-19 pandemic in 2021, U.S. prices began to soar, but the Federal Reserve was slow to respond to the issue of rate hikes, only starting aggressive rate increases in 2022. At that time, many in the economics community criticized the Federal Reserve for its slow decision-making, which undermined the best opportunity to control inflation. Now, El-Erian sees the same problem again. He believes the Federal Reserve should have cut rates in July, but due to Chairman Powell's overly narrow view of the labor market, which ignored the deepening signs of weakness, they missed another optimal opportunity to cut rates. Greater Risks Than Expected The latest U.S. employment report for August shows that only 22,000 jobs were added in August, with revisions indicating that jobs actually declined in June. Meanwhile, the unemployment rate slightly rose to 4.3%, a four-year high. This report greatly exceeded market expectations, with the data differing from the market consensus on non-farm payrolls by more than 50,000, sharply raising concerns about the U.S. economy falling into recession. El-Erian pointed out that Powell is waiting for weak labor market data to support a rate cut decision, but the market may deteriorate in a non-linear way, meaning that the pace of unemployment could accelerate rapidly, making the Federal Reserve's wait risky. He stated that the Federal Reserve still has time to correct its mistakes and may adopt a more aggressive rate-cutting strategy, but as the financial security of low-income families further declines, the risks facing the U.S. economy are rising. He warned that the risks of this action by the Federal Reserve are greater than many expect. Mark Zandi, Chief Economist at Moody's Analytics, previously pointed out that due to rising inflation, the Federal Reserve will find it difficult to save the economy through a significant easing cycle. Similarly, David Kelly, Chief Global Strategist at JP Morgan Asset Management, revealed that the entire history of the 21st century shows that rate cuts do not stimulate economic growth. After the financial crisis, rate cuts had no effect at all. Therefore, people should not expect the Federal Reserve to save the economy. Additionally, Kelly added that further rate cuts could amplify concerns about the economy, and combined with the uncertainties of Trump's tariffs and immigration crackdown, these concerns could become another drag. Companies have not yet engaged in large-scale layoffs and are merely observing, but one of the deadliest words in economics is "wait and see." 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