El-Erian” ‘Big Shock’ Needed to End View That Fed Is Friend

Mohamed El-Erian, Allianz SE’s chief economic adviser, said people have become so used to monetary policy makers cushioning market volatility that it will be hard to shake assumptions that more help will always be around the corner.

“Investors are very comfortable right now with the notion that you should bet on the central banks as their best friends,” El-Erian said in an interview on Bloomberg Television. “So you really do need a big shock to get us out of this conditioning.”

The U.S. Federal Reserve has raised interest rates only four times in the past two years after holding them near zero since the financial crisis. The pace of monetary tightening has been slow after bond markets panicked at the idea of more rapid rate increases. Last year’s U.K. Brexit vote also discouraged the Fed from lifting rates more swiftly, as has low inflation.

“Markets are confident that central banks

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