Three reasons why the Fed should raise rates now

The Federal Reserve on Thursday raised the benchmark interest rate for the third time this year, a move Allianz Chief Economic Adviser Mohamed El-Erian supports. In an interview with FOX Business, he said the U.S. economy is "outpacing others" which is why policymakers have been gradually raising rates - one more increase is expected in 2018, with three more in 2019, the Federal Reserve stated on Wednesday.

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With consumer confidence on the brink of breaking a record high and jobless claims falling to the lowest level in 49 years, El-Erian said that a healthy U.S. economy is the first reason to raise rates. In addition, he expects domestic consumption and business investments to fuel even more growth. In other words,  interest rate hikes will help keep the economy from overheating and becoming dangerously inflationary.

“Overall the U.S. economy has a lot of domestic momentum,” El-Erian said during an appearance on “Mornings with Maria” on Wednesday.

“You saw that again yesterday [with an]18-year high for consumer confidence. Whether it’s household spending, whether it’s business investment – these two things will continue to power the economy through.”

He cited two other reasons for the Fed to raise interest rates.

"Two, they are very close to meeting the fuel mandate and, three, they’ve been vindicated for ignoring weakness outside the U.S.,” he said.

El-Erian added that he also expects the Fed to bump up market expectations