The U.S. Federal Reserve is on a "beautiful normalization" that balances rising interest rates and the stability of markets and the economy — something the next chairperson, whoever it will be, would not want to disrupt, Allianz Chief Economic Advisor Mohamed El-Erian said Thursday.
"The Fed's embarked on this beautiful normalization: It has stopped [quantitative easing], it has raised rates, it has declared a path to reduce its balance sheet without disrupting markets and without derailing the global recovery. And I don't think anybody will want to mess with this beautiful normalization," El-Erian told CNBC during the 2017 Barclays Asia Forum in Singapore.
That means that "nothing will change" in the short term, El-Erian added, with the Fed expected to raise interest rates in December and to continue pressing ahead with winding down its balance sheet.
Acknowledging that investors have been over-complacent with high levels of returns, El-Erian said a major uncertainty is whether more central banks can deliver a "beautiful normalization" like the Fed.