alliance chief economic adviser well-known economist Mohamed El Erian believes that inflation will remain stubborn and that when it reaches 4% society will have to make an important decision about what the next steps would be.

“We will not go back to where we came from – for many reasons. One is the unintended consequences of a ridiculous regime of very low interest rates and never-ending quantitative easing. Inflation will not fall excessively. We’re going to get sticky inflation. When we reach 4%, society will have to make an important decision about what to do next. So we don’t go to the old regime. We are leaving one regime and entering another – money is valued more appropriately,” El-Erian said said on Bloomberg TV.

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Major Wall Street indices closed in the green Tuesday, albeit marginally higher, ending a four-day losing streak as investors and traders do Watch for a highly anticipated year-end rally. Surprisingly, market participants chose to shrug off a surprise move Bank of Japan raising its yield cap on its long-term bonds — a move that sent bond yields skyrocketing around the world. That SPDR S&P 500 ETF Trust SPY closed 0.14% higher during the Vanguard Total Bond Market Index Fund ETF BND 0.66% lost.

On Japan: El-Erian noted that after the government’s surprise move, he sees no possibility of forced sales of foreign assets by Japanese institutions.

“To those wondering about the very muted reaction of US markets to the Bank of Japan news:

The main contagion risk here is the possible forced sale of loans and other foreign assets by Japanese institutions. The movement in JGB yields is currently not large enough to force such selling,” he said in his tweet.

“Think of the BoJ’s ramped-up JGB buying as an attempt to mitigate the risk of markets testing the new 50 basis point ceiling at the risk of adding structural stress to the functioning of…