Ahead Of Fed Rate Decision, El-Erian Warns Central Bank May Not 'Validate' More Cuts

El-Erian added that he expects the central bank to also acknowledge that the impact of President Donald Trump’s tariffs on inflation has been lower than expected.

Mohamed El-Erian, Chief Economic Advisor at Allianz, said on Wednesday that after the highly anticipated Fed rate decision later during the day, the central bank is unlikely to “validate” additional rate cuts.

“The world’s most powerful central bank is unlikely, however, to explicitly validate the additional cuts that markets have priced in or fully embrace the significant productivity upside from AI and other innovations,” El-Erian said in a post on X.

El-Erian added that he expects the central bank to also acknowledge that the impact of President Donald Trump’s tariffs on inflation has been lower than expected. This comes after the Consumer Price Index (CPI) report for September showed the inflation was at 3%, lower than Wall Street’s consensus of 3.1%.

El-Erian’s comments come hours before the Federal Open Market Committee (FOMC) is scheduled to announce its interest rate decision. According to data from the CME FedWatch tool, there is a 97.8% probability of a 25 basis point rate cut.

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