Mohamed El-Erian Says Fed Wants To 'Fly Under The Radar,' Expects No Rate Cut Until June At The Earliest

The Federal Reserve maintained interest rates at 4.25%-4.5% on Wednesday, prompting Allianz Chief Economic Advisor Mohamed El-Erian to suggest rate cuts might not materialize until June at the earliest, while President Donald Trump criticized the central bank’s approach to banking regulation.

What Happened: El-Erian, writing on X, noted that the Fed’s statement points to a “solid economy” and “elevated” inflation, with markets pushing yields slightly higher after the removal of language about inflation progress.

“I strongly suspect that the goal of the Fed is not for us to learn anything new,” El-Erian told BBC, suggesting the central bank aimed to “fly under the radar” during this meeting. “I suspect we won't see an interest rate cut until June at the earliest.”

The SPDR S&P 500 ETF Trust SPY traded near flat following the announcement, while Treasury yields edged higher, with the two-year yield increasing 3 basis points to 4.24%. Market expectations now show a 30% probability of a March rate cut, increasing to 45% for June.

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Why It Matters: Trump, responding to the Fed’s decision on Truth Social, pledged to address inflation through expanded energy production and regulatory cuts if elected. “The Fed has done a terrible job on Bank Regulation,” Trump wrote, promising Treasury-led reforms to “unleash lending for all American people.”

Fed Chair Jerome Powell, maintaining the central bank’s independence, declined to comment on Trump’s criticism during his press conference.

Comerica Bank Chief Economist Bill Adams suggested the Fed’s cautious stance might reflect concerns about potential inflationary pressures from proposed Trump administration policies, including higher tariffs and immigration controls.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.