Mohamed El-Erian Says Economic Growth Best Response To Debt Issue: 'My biggest worry is…'

Allianz chief economic adviser and noted economist Mohamed El-Erian reportedly said the best response to a debt issue is economic growth.

"…my biggest worry is this whole saga has done three things that actually undermine economic growth. One, it has diverted the attention of Congress for weeks. Two, it has undermined the trust of the American people in our policy-making process, and three, it has sent this wrong signal to the rest of the world about our ability to manage our situation," he told CNBC.

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In the latest development regarding the borrowing limit, the debt ceiling bill surpassed an important hurdle on Tuesday evening as the powerful House Rules Committee reportedly voted seven to six to advance the bill to the floor. The bill will hit the floor Wednesday for debate and a final passage vote before it goes to the Senate.

Minority Leader Hakeem Jeffries reportedly said that Democrats will deliver at least enough votes in combination with Republicans to guarantee House passage of the debt-ceiling deal on Wednesday night.

Fed Action: Talking about the next big focus in current times, El-Erian said if one takes the Federal Reserve at its word, which is they are excessively data dependent, then given the data, the central bank would find it hard to pause.

"Between now and the next meeting, we have a CPI report and we have a jobs report. So, this could change. The problem is that because the Fed is so data-dependent, even the Fed itself is all over the map. We have those who think we should pause, you have those who think we should skip — meaning, you pause now but hike at the next one. We have those who think that we should have hiked and even one person who thinks that we shouldn’t have hiked," El-Erian said.

"This is the problem when you lack a strategic underpinning — the data can swing year round and with that, we swing all over the place," he added.

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