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High growth is only exit from QE : El-Erian

The only way the Federal Reserve can get out of its massive quantitative easing bond-buying program is to achieve "high endurable growth," Pimco CEO and co-CIO Mohamed El-Erian told CNBC on Thursday.

"We embarked on [QE3] because there was no better alternative," El-Erian said in a "Squawk Box" interview. "We've continued on it because the more you do the harder is it to exit."

He spoke ahead of Thursday's Senate confirmation hearing for Janet Yellen as Fed Chairman Ben Bernanke's successor.

(Read more: What the GOP really wants out of Janet Yellen)

Mohamed El-Erian
Emile Wamsteker | Bloomberg | Getty Images
Mohamed El-Erian

"Thank God, I'm not Janet Yellen," El-Erian joked. "This is a really hard job and we've got a very qualified person who's going to take over."

He added he thinks Yellen got it "absolutely right" in her advance testimony when she emphasized growth.

(Read more: Yellen: Still need to support recovery)


"There's only one way to get us out of this," El-Erian said, referring to QE. "High endurable growth."

"The whole system has now bet on the effectiveness of bond purchases—not in terms of asset prices, we know that works—but in terms of ultimately delivering growth," he said.

With the economy expanding at only about 2 percent, El-Erian said, "we're still stuck in this slow growth equilibrium."

He does not expect the Fed to start scaling back its bond-buying in December, but said that's the wrong question. Whenever tapering comes, he said, "what you got to ask is: "What does the policy mix look like through next year?'"

El-Erian predicted the Fed will keep its "foot on the accelerator," continuing its QE stimulus. "It will tweak it, ... a bit less QE over time, a bit more forward guidance" on how long the central bank plans to keep interest rates near zero.

By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.

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