alliance Chief economic adviser and well-known economist Mohamed El Erian believes The federal reserve is not only facing a dilemma of inflation versus growth – it is staring at a trilemma in which financial stability is also a factor.

What happened: “We have no good way out,” El-Erian told CNBC.

The well-known economist believes the least bad moves the Fed could take are to consider pausing after recent rate hikes, making sure the financial contagion is over and assessing the economic contagion coming with politics is harder to combat.

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“And then try to resolve this big difference between what the Fed is telling us what’s going to happen to rates and what the markets think, Joe. We have to solve this because the longer it remains unresolved, the bigger the problem it needs to be solved,” he said.

Exhausting week: Market participants are eagerly awaiting the release of the Personal Consumables price index, the Fed’s preferred measure of underlying price pressures. Investors and traders will also be paying attention to statements from various central bank officials this week.

The SPDR S&P 500 ETF Trust SPY closed 0.19% higher during the Invesco QQQ Trust Series 1 QQQ 0.69% lost.

When borrowing: When asked about a possible tightening of lending in the wake of the banking crisis There El-Erian noted two drivers are the same.

“For one thing, the banks themselves are becoming more conservative. But on the other hand, the banks expect that the regulations will become stricter. Regulators and supervisors have been embarrassed and the answer has always been, “tougher regulation,” although this is more than a regulatory failure, it is a regulatory failure,” he said.

El-Erian also pointed out that the issue to be wary of is the credit side. “It’s this notion of rolling credit contractions that we’re all worried about. So I’m not worried about interest rate mismatches. I think that …