Mohamed El-Erian, the chief economic adviser at Allianz SE,said on Thursday that with volatility rising, the markets effectively have served as front-runners to the Federal Reserve in tightening global financial conditions.
"I doubt we will see the four rate hikes signaled a few weeks ago by Fed officials,"El-Erian said. "Two hikes are likely, if not less."
William Dudley, president of the Federal Reserve Bank of New York, said on Wednesday that financial conditions have tightened considerably in the weeks since the Fed raised rates. He added that policymakers will take that into consideration if the phenomenon persists. So far this year, the benchmark Standard & Poor's 500 Index is down 6.31 percent.