The central bank's shift to a more dovish stance has contributed to greater volatility in financial markets, according to Allianz's El-Erian.
The U.S. Federal Reserve has switched from a stance that was"too hawkish" at the end of last year to"too dovish" presently, according to Mohamed El-Erian, Allianz's chief economic advisor.
The American central bank last December raised its benchmark funds rate by 25 basis points — the fourth increase in 2018 and the ninth since the Fed started normalizing rates at the end of 2015. Three months later, in March, the Fed decided to hold interest rates steady and indicated that it may not hike rates at all this year.
Europe, he said, would be"lucky" to grow by 1 percent this year given the challenges facing the largest economies in the region. The International Monetary Fund's data on euro area growth — which consists of Germany, France, Italy and Spain — showed 1.8 percent expansion in 2018. The IMF estimated that the four economies would expand by 1.3 percent this year.
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