Fmr. Obama Econ. Adviser El-Erian: Green Energy Transition Helped Create Higher Inflation Environment

On Friday's broadcast of Bloomberg's “Surveillance,” Bloomberg columnist, economist, President of Queens’ College, Allianz Chief Economic Adviser, and former Obama Global Development Council Chair Dr. Mohamed El-Erian stated that the “sustainable energy” transition has helped create “a world that's subject to higher inflation” than the world we had before.

After arguing that the 2% inflation number is an “arbitrary” number and going from 3% to 2% isn't worth it, El-Erian said that “if you were to establish an inflation target today based on the secular issues, and let's talk about it, the domestic paradigm is changing. We're no longer in this Washington consensus of deregulation, liberalization, and fiscal prudence. We are in a world of industrial policy, government intervention, and fiscal irresponsibility. Let's talk about the international, we're no longer talking about…globalization. We're talking about fragmentation. Then look at the transitions we have, we have major transitions going on, not just generative AI, life sciences, and sustainable energy, we have things happening in health care, you have things happening in defense, you have things happening in food security. If you put all that together, it is a different inflationary environment. It's a world that's subject to higher inflation, and we've come from a world that was subject to lower inflation.”

Follow Ian Hanchett on Twitter @IanHanchett

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