Federal Reserve takes action to address economic concerns

On August 24, 2025, Mohamed El-Erian, the chief economic advisor at Allianz, appeared on 'Face the Nation' and discussed recent developments at the Federal Reserve, particularly its decision to begin lowering interest rates. Federal Reserve Chair Jerome Powell indicated the move was necessary due to slowing economic growth and a cooling job market. El-Erian emphasized that the risk to employment is now greater than the risk of inflation, therefore justifying the interest rate cut. He highlighted that tight immigration policies were contributing to slower labor growth, with uncertainties stemming from significant tax and regulatory changes. El-Erian acknowledged the pressures faced by the Federal Reserve and the inextricable link between its decisions and the current economic landscape. He underscored that Powell and the Fed have historically been data-dependent in their decisions, often responding belatedly to evolving market dynamics. The panel also discussed the unusual decision for the U.S. government to take a stake in Intel, a struggling chip maker, which prompted a debate on the implications for corporate ethics and government interventions in the economy. The conversation shifted to the broader ramifications of such federal actions, with concerns raised about a perceived culture within the Federal Reserve leading to multiple resignations. El-Erian urged the necessity to preserve the independence of the central bank, particularly in light of the political scrutiny it faces. The discourse around the potential for political interference concentrated on the Fed and the role of the President in making public statements that could undermine the central bank's authority. In the wider economic context, El-Erian also elaborated on the U.S. dollar's status as the world’s reserve currency, pushing back against narratives suggesting the dollar's potential decline. He argued that alternatives such as the euro or Chinese yuan are constrained by serious limitations, reinforcing the dollar's dominant position in global transactions. El-Erian concluded that despite the Fed's challenges and the risks associated with fiscal irresponsibility, no viable alternatives to the U.S. dollar currently exist, affirming its continued significance.