Economist Mohamed El-Erian: ‘Inflation’s Going to Be Sticky at Around 4-5%’

On Monday’s broadcast of CNBC’s “Squawk Box,” economist and President of Queens’ College Dr. Mohamed El-Erian stated that in the wake of the March CPI’s core inflation reading running at expectations with a 0.4% month-over-month increase and 5.6% year-over-year increase, the markets and inflation surveys both are recognizing that inflation is “going to be sticky at around 4-5%” and that he agrees with this assessment.

While discussing how the markets are digesting inflation data, El-Erian said, “[C]ore inflation was not weaker than expected at 5.6%, and that’s one to look at. And second, flying under the radar screen are survey measures of inflation. You had the New York Fed last week showing that inflation expectations for this year have gone up a full half a percentage point. You had The Wall Street Journal this morning surveying economists, that’s up 0.4 percentage points. So, what you’re getting is recognition that inflation’s going to be sticky at around 4-5%. And that’s what’s been reflected in the two-year that has traded back up to 4.14 and higher expectations of a 25 basis points hike at the beginning of May.”

Co-host Becky Quick then asked, “You think that it’s going to be stickier, too?”

El-Erian responded, “Oh, absolutely.”

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