While everyone is expecting an Interest Rate Cut from the FED, market oracle El-Erian made a Reverse statement!

Allianz Chief Economic Advisor and President of Queens' College, Cambridge University, Mohamed El-Erian stated in an appearance on CNBC's "Squawk Box" program that investors should expect fewer and later interest rate cuts from the FED this year.

According to El-Erian, although there may be a short-term easing in the markets in light of global economic uncertainties and geopolitical developments, the road ahead is not smooth and a rather bumpy process will be experienced.

El-Erian, who indicated that economic activity is expected to increase in the next 90 days thanks to the trade truce reached between the US and China, noted that this situation could be temporary and that many uncertainties still persist. Regarding expectations for the FED's interest rate cuts, he stated, "The likelihood of an interest rate cut has decreased and is currently postponed in terms of timing."

El-Erian stated that despite the decline in indicators referred to by economists as "soft data," the "hard data" remains strong, which has created some mixed signals. According to his forecast, a slowdown in the U.S. economy and an increase in inflation are expected, but a sudden jump in the unemployment rate is not anticipated. He expressed that companies are hesitant to make major decisions, and layoffs may be limited for this reason.

The program also discussed the effects of reshaped supply chains due to trade wars. El-Erian stated that companies are now operating not only with the "China + 1" model but also with the "China + 2 or 3" strategy, and that this could encourage investment in the U.S. However, he mentioned that for this to happen, the U.S. administration needs to provide clarity in its trade policies.

Finally, El-Erian stated regarding the global economic outlook, "We are progressing between two possibilities: one is economic fragmentation, the other is a stronger USA within a fairer trade system. Currently, the second scenario seems a bit more likely, but it is still a fifty-fifty situation."