El-Erian Warns Against Expecting Lower Prices

Economist Mohamed El-Erian has cautioned that while inflation is cooling, it does not imply that prices will return to pre-inflation levels. He emphasized on CBS's 'Face the Nation' that Americans are likely to remain burdened by high housing and grocery costs, despite a potential Federal Reserve interest rate cut. El-Erian noted that the economy is expected to grow without overheating, but concerns linger over a possible rise in inflation before productivity gains materialize. He also addressed misconceptions about inflation rates versus actual price decreases, warning that significant price drops could lead to worse economic conditions. Meanwhile, in Australia, the Reserve Bank is expected to hold interest rates steady despite slowing inflation, with cuts anticipated only in early 2025, reflecting ongoing concerns about underlying inflation trends. Overall, both U.S. and Australian economists share a cautious outlook amidst mixed signals in economic recovery.