Federal Reserve to cut rates in 2020: Mohamed El-Erian

The Federal Reserve will keep its hand away from the rate cut flames this year, but may consider trimming the federal funds rate in 2020, according to Allianz chief economic adviser Mohamed El-Erian.

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“In a sense that, they’ll do nothing this year and if they do anything next year, which is 2020, they’ll probably cut,” he told FOX Business’ Liz Claman on Tuesday.

The U.S. central bank has indicated it will take on a “patient” approach towards monetary policy in 2019 while closely watching the economy and markets for signs of a global growth downturn.

Wall Street’s most followed economist predicts the economy will not fall into a recession if the Fed decides push for a rate cut next year.

“I think the U.S. economy is in a really good place,” El-Erian said. “Just look at the last labor report, the U.S. economy produced twice as many jobs as expected, wages are going up by 3.2%, and people are coming back into the labor force.”

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El-Erian warns that the U.S. economy is at risk of becoming contaminated by the state of the European economy.

“I’m not negative on the U.S. economy,” he said. “I can understand the concerns about Europe and China, but I think people go too far in extending that to the U.S.”