What does El-Erian expect from the Fed in the near and long term?
In the short term he sees:
- No change in rates.
- No change in quantitative easing.
- No change in forward guidance.
Over the next 24 months he thinks Fed action and the consequences of them are much more unclear.
At some port the new Fed Chairman Yellen is going to have to pivot towards tapering and there is no established playbook on how to do this.