El-Erian: 50-50 Chance of a December Rate Hike

During an interview with The FOX Business Network’s Maria Bartiromo, Allianz Chief Economic Advisor Mohamed El-Erian discussed his views on a Fed rate hike.

“In September it was about the global economy being a headwind to a U.S. economy that continues to heal. The jobs report had put a question mark on the notion that the U.S. economy is [continuing to heal]. It is continuing to heal and I would suspect that at the end of the day there is a 50/50 chance they will hike rates in December but it’s a pretty tough call right now,” he said.

El-Erian explained why there is a 50-50 chance of a Fed rate hike in December.

“We started from abnormally low rates. Second they [are] worried about what these abnormally low rates do to asset allocation… and finally let’s not forget the U.S. continues to create jobs.”

El-Erian said communication is critical when it comes to easing the markets fears over the rate hike timing.

“They have to help the markets stop obsessing about the timing of the first rate hike and help us look at the journey.”