Prepare for Higher Market Volatility

Mohammed El-Erian said investors should prepare for increased market volatility if the US Federal Reserve pulls back on stimulus measures set in motion by the Covid-19 pandemic.

“I worry a little bit that this wonderful world we’ve been living in of low volatility, everything going up, may come to a stop with higher volatility,” El-Erian, the chief economic adviser at Allianz SE and president of Queens’ College, Cambridge, said on Sunday,wer services reported.

While a lot depends on behavioral changes, the Fed “should ease off the pedal-to-the-metal monetary stimulus,” he said.

“If I were an investor, I would recognize that I’m riding a huge liquidity wave thanks to the fed, but I would remember that waves tend to break at some point, so I would be very attentive,” he said.